SJM Calls for End to Customs Duty Pause on Digital Goods Ahead of WTO Meet

Swadeshi Jagran Manch (SJM) has called for an end to the pause on customs duties on e-transmission of digital products, stating that it is undermining the push for self-reliance, causing revenue losses and limiting the country's ability to tax emerging technologies like artificial intelligence (AI).

The RSS affiliate's fresh demand for an end to the moratorium comes ahead of the 14th Ministerial Conference of the World Trade Organisation (WTO) in the last week of March, where a decision on the extension of the e-commerce moratorium is expected to be one of the key issues.

The e-transmission of digital products is the online delivery of products such as software, music, videos or ebooks.

SJM national co-convener Ashwani Mahajan said the duty-free regime on digital imports is weakening India's Atmanirbhar Bharat ambitions by discouraging domestic production.

"Our start-ups and software companies are able to make a variety of electronic products, where they can make movies and other entertainment products domestically, but if all such products are imported undeterred, without tariff, there is little incentive to produce them indigenously.

"This tariff moratorium on e-products is actually killing our efforts of 'Atmanirbhar Bharat', benefitting US, European countries and China," he said in a statement.

Mahajan said the moratorium is also eroding India's ability to tax new-age digital sectors, particularly AI, and may further accentuate the monopoly of the US and China.

"As is expected that in future, share of AI in GDP will be huge, moratorium on custom duty on e-transmission, will cause a huge revenue loss, and may further accentuate monopoly of US and China, which in turn will hit at the very heart of national economic sustainability, and thereby political sovereignty," Mahajan said.

"Today, the issue is no longer limited to traditional electronic transmissions. Artificial intelligence is emerging as a dominant force, and if AI products are allowed to enter India without any customs duties, we will lose a critical opportunity to tax these services and regulate their impact," he said further.

Mahajan warned that this will also have serious implications for employment and policy-making.

If we allow digital products via e-transmission to enter Indian territory without custom duties, it will impact domestic enterprises, mostly start-ups, and it will also take away an opportunity to tax AI services, which is essential for saving the population from unemployment, he argued.

Highlighting the risk posed by the growing adoption of 3D printing, Mahajan pointed out that India may lose huge customs duties, as designs will replace physical goods' imports, free from payment of customs duties.

"With widespread adoption of 3D printing, products like auto parts, medical devices, toys, and machinery components can be traded as design files instead of goods. Customs authorities may lose the ability to track and tax trade. Manufacturing may shift to distributed digital production networks," he said.

Citing NITI Aayog estimates, Mahajan said India's imports of digitally delivered services have grown sharply in recent years, but due to the moratorium, no customs duties are levied on these imports, resulting in significant revenue losses for the country.

"As per NITI Aayog's estimates, India imported $116.9 billion worth of digitally delivered services in 2024, up from $41.4 billion in earlier years, which shows an accelerated growth.

"Though for 2017, the revenue loss was estimated at $500 million but it's likely to be much higher now due to explosion in streaming movies, digital books, SaaS, AI tools, gaming imports (video games) etc. With rising import base of $117 billion, even the most conservative estimates put this loss to be $2 billion annually," he added.

Tracing the background, Mahajan noted that the moratorium was introduced in 1998 when digital trade was at a nascent stage and was meant to be temporary.

"The moratorium made sense in 1998, when digital trade was limited. However, it has been repeatedly extended at successive WTO ministerial conferences despite the massive expansion of digital trade. It is now time to review and end this provision," he told PTI.