India to skip global e-comm talks despite chances of draft policy overhaul

India would continue to skip global talks on e-commerce despite the high likelihood of the government bringing out a fresh draft of the proposed e-commerce policy after elections, said sources in the know.

Senior Commerce Department officials have briefed the Prime Minister’s Office on why joining ongoing talks at the World Trade Organization (WTO) would erode India’s policy space to regulate foreign firms.

New Delhi would instead push the draft e-commerce policy back home, with talks on data repatriation, taxation and corporate control. Industry body Nasscom has supported the move in its submissions to the ministry.

India protest ignored

Despite protests from major economies like India, 76 mostly developed nations agreed to initiate talks on the subject in January. Pushed by the EU and the US, the move has also been supported by major conglomerates like Google and Facebook in India.

The latest developments at the WTO are unprecedented, officials said.

“WTO rules come into effect for all 164 members and need to be ratified by each, but for the first time a major decision has been taken without complete consensus among member nations. We will not encourage a multilateral platform to run, based on the interests of a few nations. Our policy will deal with concerns such as cross-border data flows,” a senior official said.

Over the past 10 years, over 25 per cent of the regional trade agreements notified to the WTO had contained a specific chapter on e-commerce or individual e-commerce provisions, and the number was growing, Frances Lisson, Australia’s ambassador to the WTO, has said.

India was taken off guard by China’s support of the deal earlier this month, a U-turn in its policy, officials hinted. “The deal has been pushed hard by Jack Ma-led Chinese e-commerce conglomerate Alibaba, which has partnered with the WTO and the World Economic Forum to create Electronic World Trade Platform (eWTP) — an e-commerce trade portal for small enterprises,” an official said.

Problem of taxation

The government believes the push for initiating negotiations on substantive obligations related to e-commerce would oblige India to permanently accept the current moratorium on imposing customs duties on electronic transmissions.

“With increasing digitisation, more and more products such as books, music, films, video games, etc. are being traded electronically. By agreeing to the permanent moratorium, countries with tariff schedules, which allow putting duties on these kinds of products, will give up these rights and lose revenues,” the draft said.

Policy space to grant preferential treatment of digital products created within India must also be retained, it added.

However, New Delhi has hinted that it was willing to tax electronic transactions in the near future, using Section 9(1)(i) of the Income Tax Act. “The current practice of not imposing custom duties on electronic transmissions must be reviewed in the light of the changing digital economy and the increased role that additive manufacturing is expected to take,” according to the draft.