India’s draft e-commerce policy said that, in the context of international trade negotiations, policy space for granting preferential treatment to digital products created within the country would be retained. Photo: Mint
India’s draft e-commerce policy said that, in the context of international trade negotiations, policy space for granting preferential treatment to digital products created within the country would be retained. Photo: Mint

India may be preparing for a bitter battle over e-commerce at WTO

India warns that attempts by developed nations to frame rules on e-commerce outside the WTO framework could undermine the consensus principle at the multilateral body

New Delhi: India is readying to fight a bitter battle on e-commerce at the multilateral forums like the World Trade Organization (WTO) with the draft e-commerce policy proposing policy space to impose customs duties on electronic transmissions as well as for granting preferential treatment to digital products created within India. At present, under a WTO moratorium, countries do not impose customs duties on cross-border e-commerce transactions.

During the Buenos Aires Ministerial of WTO in December last year, 71 members led by countries like China, Japan and the US in a joint statement said they would initiate exploratory work towards future WTO negotiations on trade-related aspects of electronic commerce.

India last week warned that attempts by developed countries to frame rules on e-commerce outside the WTO framework could undermine the consensus principle at the multilateral body, as there is an existing mandate for similar discussions to take place within the WTO.

The draft policy prepared by the task force headed by commerce secretary Rita Teaotia said the proposed obligations at a global level in respect of e-commerce appear to be onerous and attempts are being made through negotiations on regional trade agreements and multilateral discussions to make the commitments more comprehensive and stringent. “If these attempts were to succeed, governments, particularly in developing countries, may be left with little flexibility to take measures for nurturing the domestic digital economy and bridge the divide to reach a more balanced dispensation," it said.

“It is, therefore, imperative that the approach the government takes on issues related to e-commerce in international trade negotiations and discussions is fully cognizant of the need to preserve flexibility and create a level-playing field to enable formulation and implementation of appropriate policies in the future for encouraging domestic innovation and boosting the domestic digital economy to find its rightful place with dominant and potentially non-competitive global players," it said.

India and South Africa in a submission to WTO earlier this month have proposed that “electronic transmission" under e-commerce be clearly defined as the present moratorium on customs duties on electronic transmissions could imply a loss of competitiveness for developing countries who have higher tariffs on physical products while the same products in digital form attract zero duty.

Developing countries, including India, fear that with advent of artificial intelligence and 3-D printing technology, products that are now delivered through offline mode could be easily transferred electronically. This will make customs duties on products irrelevant.

The draft e-commerce policy said that, in the context of international trade negotiations, policy space for granting preferential treatment to digital products created within India would be retained. “The policy space to seek disclosure of source code would be retained by not taking any commitments on this issue in international trade negotiations," it said.

The government is also working on a common definition of e-commerce for both domestic policymaking as well as international negotiations.

The draft policy also proposes to create the ecosystem to better track online transactions. Imports and exports of digital products will now be reported in the goods and services tax (GST) returns as well as in the Reserve Bank of India’s Foreign Exchange Transactions Electronic Reporting System (FETERS). “Separate and uniquely identifiable codes under the Harmonised System of Nomenclature (HSN) for recording data related to the trade in digital products would be developed," the draft policy added.

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