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In a development, with implications for the global semiconductor industry a group of semiconductor industry organizations has contacted the Indian government urging a review of its position on imposing tariffs on cross border digital e commerce and data transfers. This request comes ahead of the World Trade Organization (WTO) meeting set to occur in Abu Dhabi next week where ministers from various countries will discuss trade related matters, including the potential extension of a moratorium on electronic transmission duties that has been in place since 1998.

The coalition, which consists of semiconductor industry associations from the United States and China representing companies such as Qualcomm, Intel, AMD and Nvidia has raised concerns about Indias stance. As per the World Semiconductor Council (WSC) imposing tariffs on data transfers could have repercussions for Indias growing chip design sector—an essential industry in Prime Minister Narendra Modis economic development strategy. The Indian government had previously unveiled a $10 billion incentive package to support the semiconductor industry underscoring its importance to the countrys aspirations.

The WSCs correspondence, with Prime Minister Modi underscores the impacts of discontinuing the moratorium.

The implementation of tariffs, on e commerce and chip design data transfers could result in expenses and worsen the existing shortage of chips. Additionally such actions may impede Indias efforts to progress its semiconductor sector and attract investments in this field. This is especially significant as India hosts than 20% of the semiconductor design workforce highlighting its substantial impact on the worldwide semiconductor industry.

India alongside emerging economies like South Africa and Indonesia is poised to challenge initiatives by the United States and Europe to prolong the moratorium. The dispute stems from the changing nature of products, where goods subject to tariffsre now increasingly accessible as digital services. India asserts that this transition has caused revenue declines for developing countries advocating for levies on these imports from developed nations.

In a written communication the WSC also urged India to contribute towards securing a WTO agreement that would permanently exclude border data and digital tools from customs duties and regulations. The organization believes that Indias backing of moratorium renewal would demonstrate globally that it is dedicated to fostering an investment atmosphere, for advancing its semiconductor sectors growth and progress.

The semiconductor consortiums plea sheds light on the relationship, among trade policies, technological progress and economic development strategies. With ministers gathering in Abu Dhabi to address these matters the global community eagerly anticipates the outcomes that will influence the trajectory of the economy and semiconductor sector worldwide. The Prime Ministers office has not yet issued a response, to the WSCs letter creating suspense among industry players as they await Indias position on this matter.