The government will examine the United States’ proposed retaliatory tariffs on up to 25% on around 40 Indian products in response to India’s equalisation levy on non-resident ecommerce operators and take measures in line with public and commercial interests, officials have said.

The United States Trade Representative (USTR) has proposed to impose retaliatory tariffs on Indian shrimps, basmati rice, gold and silver items, bamboo products, wood furniture, cigarette paper, cultured pearls, precious or semi-precious stones, and token-operated games for arcade among others in response to the 2% equalisation levy, or the socalled Google tax, that came into effect on April 1, 2020.

The USTR has identified 119 companies that are likely to be liable under India’s digital service tax (DST) on revenues earned from transactions with Indian consumers, out of which 86, or 72%, are American companies.

“Government of India will examine the proposed action with the stakeholders concerned and take suitable measures, keeping in mind the trade and commercial interest of the country and overall interest of its people,” an official said.

Experts said India can raise a dispute at the World Trade Organization (WTO) if the US imposes any such tariffs, and draw up its own list of retaliatory actions such as banning American audio-video streaming services, social media platforms and credit cards.

“India should not withdraw the levy or show any consideration because our digital future is at stake,” a Delhi-based expert on WTO issues told ET. “If the US imposes any retaliatory tariffs, we should immediately file a dispute at the WTO.” India must also draw up its own list of retaliatory actions especially on services where it has flexibilities, the person said.

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