What is meant by electronic transmissions in global trade? Do you think negative list approach on custom duties on electronic transmissions is a better alternative in protecting the competitiveness? (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands
IAS Parliament 5 years
KEY POINTS
· Electronic Tramissions are on-line deliveries of ‘digitizable products’, e.g., of music, printed matter/e-books, films, softwares and video games.
· Economic development approaches reminiscent of pre-liberalisation-era industrial policies are back in vogue. This is visible in the recent Union budget hiking customs duties on products ranging from electrical appliances to automobiles.
· India agreed not to impose customs duties on electronic transmissions in 1998, under WTO’s Work Program on e-commerce. This means no duties are applied to products and services transferred electronically. Such multilateralism is designed for flexibility, and the moratorium is reversible.
· India’s service industry prospers in an open trade environment, but stagnate in a closed one—90% of the revenue of open IT and IT-enabled industries comes from global markets.
· India is also a net importer of banking and financial services—industries protected from foreign competition. Their lack of global competitiveness translates to poor domestic performance.
· India’s protectionist stance relies heavily on a 2019 UNCTAD report, which claimed that the country can annually gain around half a billion dollars in customs revenues on electronic transmissions.
· While digital imports don’t necessarily reduce the need for physical imports, rapid digitalisation can cause an increase in physical imports of electronic equipment. India’s electronics imports will overshadow oil imports within the next decade.
· Another reason is that if India imposes duties, other countries will respond in kind. India accounts for only around 2% of global trade in value added terms, and digital markets can help increase this.
· Digital companies seldom pay their fair share of local taxes. India’s concerns on the front of revenue losses from this are not unfounded. But, there are better ways to address them than protectionism that distorts markets. India’s Significant Economic Presence test, Equalisation Levy, and support to OECD in designing a global tax framework are all better solutions.
· A negative-list approach, allowing flexibility to identify specific products and services not covered by the moratorium, is one such idea. Such a compromise may help break the multilateral gridlock and preserve India’s digital competitiveness.
Shivangi 5 years
Please review.
IAS Parliament 5 years
Good attempt. Keep Writing.
