India’s plan to let 1998 digital trade deal expire may worsen chip shortage

Enlarge (credit: Narumon Bowonkitwanchai | Moment)

India's plan to let a moratorium on imposing customs duties on cross-border digital e-commerce transactions expire may end up hurting India's more ambitious plans to become a global chip leader in the next five years, Reuters reported.

It could also worsen the global chip shortage by spiking semiconductor industry costs at a time when many governments worldwide are investing heavily in expanding domestic chip supplies in efforts to keep up with rapidly advancing technologies.

Early next week, world leaders will convene at a World Trade Organization (WTO) meeting, just before the deadline to extend the moratorium hits in March. In place since 1998, the moratorium has been renewed every two years since—but India has grown concerned that it's losing significant revenues from not imposing taxes as demand rises for its digital goods, like movies, e-books, or games.