26 Feb 2024 -
 General

India’s WTO stance raises concerns for chip industry growth

technology-data-transfers

Chip industry groups urge India to back down on proposed duties at the WTO meeting in Abu Dhabi, fearing it will harm their own domestic chip design efforts.

Developing nations, including India, South Africa, and Indonesia, are expected to oppose extending the moratorium on applying duties on electronic transmissions which has been in place since 1988. The move is opposed by the US and Europe and has caused general alarm within the chip industry, with the World Semiconductor Council (WSC) urging India to reconsider its position.

India’s rationale for opposing the moratorium extension stems from the increasing availability of goods, like books and videos, in digital formats. New Delhi argues that these digital services should be subject to duties, similar to their physical counterparts, to prevent potential revenue losses.

The WSC, however, urges India to support a permanent WTO agreement prohibiting duties on cross-border data and digital tools. In their letter to Prime Minister Modi, the WSC emphasises that renewing the moratorium would “send a strong signal to semiconductor companies that India is an investment-friendly environment.”

The WSC, representing major chipmakers like Qualcomm and Intel, argues that imposing duties on data transfers would hinder India’s own ambitions in the semiconductor sector. Prime Minister Narendra Modi has launched a $10 billion initiative to boost domestic chip production, and a skilled workforce already exists in India.

While the WTO meeting will address other issues, including a carbon tax proposal from the EU, the potential impact on the nascent Indian chip industry has become a crucial point of contention. The global industry is watching closely as India’s stance could significantly affect its long-term growth prospects in the semiconductor space.

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