Google tax: American IT and steel lobbies back action against India

The group has called for a retaliatory tariff action against India, if New Delhi does not roll back the 'unilateral and discriminatory' equalisation levy or Google Tax

America’s top tech lobby — Internet Association — has backed retaliatory tariff action against India, if New Delhi does not roll back the ‘unilateral and discriminatory’ equalisation levy or Google Tax.

 

It has also urged the US to help build a global consensus around developing a modern, fair, and global approach to taxing digital services to prevent such unilateral measures from countries like India.

 

The Steel Manufacturers Association in the US has also strongly backed imposition of retaliatory tariffs against India to address concerns related to unfair trade practices by Indian steel producers. It sought inclusion of over 200 additional tariff lines related to the steel sector in the retaliatory tariffs proposal.

 

Meanwhile, jewellers and jewellery associations in India and the US have strongly opposed a US proposal to impose tariff, arguing that this will result in diversion of trade to China besides having a major impact on small and medium enterprise and artisans.

 

In its comments to the US Trade Representative (USTR) over the retaliatory tariffs proposal, the association, which represents over 40 of the world’s leading internet companies, including LinkedIn, Netflix, Microsoft, and Google, expressed hope that the central government will roll back this discriminatory tax before any escalation occurs.

 

The Biden administration has threatened India with retaliatory tariffs of up to 25 per cent ad valorem on a slew of Indian products, including shrimp, basmati rice and gold, among others, over the 2 per cent equalisation levy on e-commerce operators introduced in April 2020. It is applicable on non-resident digital entities with a turnover of ~2 crore. It had invited comments on the proposal on retaliatory tariffs.

 

“It is the goal of the digital industry for India to end its discriminatory tax before any additional duties would enter into force. Thus, the proposed duties will not have to be put into place,” the association said in the comments to USTR ‘s proposal, the window for which closed on April 30. The public hearing on the matter is on May 10.

 

Gems and Jewellery Export Promotion Council (GJEPC) has, in its comments, objected to the proposed tariffs on the sector arguing that it will cause severe harm to Indian and US businesses.

 

About 17 of the 40 product lines in the proposed tariff list pertain to the gems and jewellery sector.

 

“Our sector had earlier been significantly impacted with the abrupt withdrawal of the generalised source of preference (GSP) benefits. We are now deeply disturbed with the threat of further action against our niche sector,” the association said. It urged the USTR to remove all 17 heads related to the gems and jewellery sector from the proposed tariffs list. This would help prevent diversion of trade to other countries ‘especially to China.

 

SEEPZ Gems & Jewellery Manufacturers’ Association said that the proposed action will impact India’s and US economies. “The only beneficiary would be China,” it said.

 

American jewellery, leather, apparel and footwear associations have also opposed retaliatory tariffs against India as it will make imports expensive, impacting their businesses.

 

The 40 sub-heads proposed for tariffs include Rattan furniture (a type of furniture) and parts, precious stone articles, gold rope necklaces and neck chains, cultured pearls, yarn, cigarette paper, and corks and stoppers.

 

India's collection from equalisation levy nearly doubled to ~2,035 crore in 2020-21 from ~1,138 crore in the previous year.