America’s ‘Internet Association’ backs the retaliatory tariff against India


The ongoing issue of levying unfair tax between India and the US has been fueled up, as America’s top tech lobby, Internet Association, has backed retaliatory tariff action against India.

The association said that if New Delhi does not roll back the tax it had laid on tech companies, the US has all the rights and fairness to apply similar pressure.

Adding on to that, the association urged the Biden administration to create a global pact that is structured around fair and unified approach to tax digital services and prevent such unilateral measures from countries like India.

Striking when the fire is hot, the American Steel Manufacturers Association too had pitched in their voice to impose retaliatory tariffs against Indian steel producers unfair trade practices.

Meanwhile, jewelers and jewelry 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 equalization 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 Jewlery 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 jewelry sector.

“Our sector had earlier been significantly impacted with the abrupt withdrawal of the generalized 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 jewelry sector from the proposed tariffs list. This would help prevent diversion of trade to other countries ‘especially to China

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

American jewelry, 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 equalization levy nearly doubled to ~2,035 crore in 2020-21 from ~1,138 crore in the previous year.