Should India Push for Tariffs on Digital Transmissions Currently Under the WTO Moratorium Until 2026?

The WTO E-commerce Moratorium: India and South Africa’s Intensifying Lobbying Ahead of the 2026 Ministerial Conference in Marrakesh, Morocco.

The WTO E-commerce Moratorium: India and South Africa’s Intensify Lobbying

The 14th WTO Ministerial Conference is scheduled for 2026 in Marrakesh, Morocco, and until then, the so-called e-commerce moratorium will remain in place. This moratorium, which prevents the imposition of customs duties on electronic transmissions, was extended during the 13th WTO Ministerial Conference, held from February 26 to March 2, 2024, in Abu Dhabi, United Arab Emirates, where India was represented by the Commerce Minister, Piyush Goyal.

However, the extension has not quelled the debate surrounding this issue. Prominent BRICS members India and South Africa are leading efforts to challenge the status quo, lobbying intensively on both bilateral and multilateral platforms to ensure that the moratorium is not extended beyond 2026. Their call for the imposition of duties on digital transmissions aims to shift the balance of power in global digital trade and address the growing divide between developed and developing nations. These efforts are set to intensify as the 2026 Ministerial Conference approaches, potentially redefining the future of e-commerce and digital taxation.

The Origins of the Moratorium

The e-commerce moratorium, established in 1998, was designed to foster the growth of the nascent digital economy. WTO members agreed to refrain from imposing customs duties on electronic transmissions, a move aimed at encouraging global e-commerce. Initially intended as a temporary measure, the moratorium has been renewed at each Ministerial Conference ever since, as the digital economy grew exponentially.

While the original agreement was appropriate for the digital landscape of the late 1990s, its relevance today, especially from India’s perspective, is under question. With the rise of massive multinational digital platforms and an increasingly interconnected global economy, developing countries argue that the moratorium no longer serves their interests.

The Argument Against the Moratorium

India and South Africa are among the most vocal opponents of extending the moratorium. Their stance is driven by several key concerns:

1. Revenue Loss: Developing countries are estimated to lose approximately $10 billion annually in potential tariff revenue due to the moratorium. For nations with large populations and rapidly expanding digital markets—supported by widespread internet access and digital payment systems—like India, this represents a significant loss.

2. Digital Divide: The moratorium is seen as disproportionately benefiting developed countries and large technology companies, primarily from the United States and Europe. These countries are home to the world’s leading tech giants, who benefit from duty-free electronic transmissions while reaping significant profits from global markets.

3. Policy Space: By continuing the moratorium, developing countries argue that they are surrendering their right to regulate and tax digital trade effectively. As more economic activity shifts online, this lack of control could limit their ability to foster domestic digital industries or ensure a fair competitive environment.

India and South Africa’s Proposed Alternatives

Both India and South Africa are advocating for a re-evaluation of the moratorium’s scope and even its potential expiration. They propose allowing countries the flexibility to impose customs duties on digital transmissions, thereby levelling the playing field for their domestic industries. At the core of their argument is the belief that the moratorium limits their sovereignty over an increasingly critical component of their economies—digital trade.

Additionally, these countries have called for a clearer definition of what constitutes an "electronic transmission." Given the vast range of digital products and services—ranging from software to video streaming to e-books—the current ambiguity leaves room for interpretation that often favours tech giants from wealthier nations.

Practical Difficulties in Implementing Digital Duties

While the arguments in favour of ending the moratorium are strong, the practical difficulties of imposing duties on digital transmissions are significant.

1. Determining Transaction Locations: Digital transmissions often traverse multiple borders, making it difficult to determine which country has jurisdiction to impose taxes.

2. Valuing Digital Goods: Digital products and services can be intangible, complicating the process of assigning a clear monetary value for taxation.

3. Tracking Transactions: Digital commerce can be opaque, with many transactions taking place through third-party platforms or using cryptocurrency, which makes it harder for tax authorities to enforce tax laws effectively.

Despite these challenges, developing nations like India believe that the benefits of taxing digital commerce—such as increased revenue and greater control over their digital economies—outweigh the difficulties.

Impact on Global Digital Trade

If India and South Africa succeed in allowing the moratorium to lapse, the ramifications for global digital trade could be significant. Countries could impose customs duties on cross-border digital transmissions, raising the cost of digital goods and services. This would likely affect consumers and businesses in developed countries, who have grown accustomed to duty-free digital commerce.

However, it could also open new revenue streams for developing countries, allowing them to better fund public services and infrastructure development. Additionally, the imposition of digital duties could provide a competitive boost to domestic digital industries, which are often overshadowed by multinational giants.

Balancing Development and Digital Growth

For India, the decision to oppose the moratorium is part of a broader strategy to assert its place as a major player in the global digital economy. With a large and rapidly growing digital market, India stands to gain from a balanced approach to digital taxation.

On one hand, India must protect its revenue base and support the development of its digital industry. On the other, it must recognise the importance of a thriving digital economy for growth and innovation. A complete overhaul of the moratorium could lead to unintended consequences, such as increased costs for consumers and reduced access to global digital platforms.

A more nuanced approach could involve taxing certain types of digital transmissions while exempting others, or developing a phased plan that gradually introduces duties on digital goods and services.

The Global Decision-Making Process

The 13th WTO Ministerial Conference will be critical in determining the future of the e-commerce moratorium. Like most WTO decisions, the fate of the moratorium will require consensus among all member countries. Several outcomes are possible:

1. Extension of the Moratorium: Developed nations and large tech companies may push for another extension, likely coupled with promises to address the concerns of developing countries in future negotiations.

2. Expiration of the Moratorium: If consensus cannot be reached, the default outcome would be the lapse of the moratorium, allowing countries to impose duties on electronic transmissions.

3. Compromise: A middle-ground solution may involve a redefinition of the scope of digital transmissions or a phased approach to taxation.

Shaping India's Digital Future: Domestic Consensus and Global Strategy

Engaging Stakeholders for a National Dialogue

While the 2026 WTO conference in Marrakesh is still some time away, India must begin fostering a domestic conversation among key stakeholders—both producers and consumers of digital content. This is essential as the global digital landscape evolves rapidly. Countries could eventually impose taxes on India’s vital software and IT-enabled services, which form the cornerstone of the nation’s services sector. With the continued advancements in AI and digital technologies, the role of these services is expected to grow exponentially, making it crucial for India to protect and promote its interests.

Implications of Global Digital Taxation on India

India’s strategic approach at the WTO should not be driven solely by the bureaucratic inputs of the Ministries of Commerce and Information Technology, despite the progressive outlooks of Cabinet Ministers Piyush Goyal and Ashwini Vaishnaw. A broader consensus that incorporates voices from across the nation, representing various sectors and perspectives, is essential. Such a consensus will ensure that India's position on digital taxation is not only informed by technical expertise but also by the needs and concerns of its growing digital economy.

Balancing Global Governance and Domestic Growth

The ongoing debate over the WTO e-commerce moratorium brings to light the increasing tensions between developed and developing nations in the digital age. As India and South Africa push for the right to impose duties on digital transmissions, the broader issue of global digital governance becomes ever more critical.

At the heart of this issue lies not only the potential revenue loss but also the broader ability of countries to regulate and shape their digital economies in a way that fosters inclusive and equitable growth. The decisions that emerge from the upcoming WTO conference will be pivotal—not only for India and South Africa but for the future of global digital trade.