As US trading transaction approaches, assesses India timing, scope of digital economy policy

Copyright © HT Digital Streams Limit all rights reserved. India wants to finalize a bilateral agreement with the US before the US reciprocal rates on July 9. (Reuters) Summary India-us Trade Talk: New Delhi is reassessing the timing and contours of pending policy measures such as Digital Competition Bill, A Comprehensive E-Commerce Framework and New Income Attribution Rules New Delhi: As India and The Us Moving Closer to Final Trade Pact Ahead of the 9 July Tariff Deadline, New Delhi is reassessing the timing and contours of pending policy measures that are sensitive to the interests of American technical giants. This includes the proposed Digital Competition Bill, a comprehensive e-commerce framework and new revenue spectory rules for non-resident businesses, according to three people familiar with the matter. The recalibrations are weighed to ensure that the policy measures correspond to the broader objectives of the India American Trade Agreement and reflect India’s commitment to a trust-based regulatory framework and investment requirements, one of them said. “Policy measures on the drawing board can also be a bargaining disc in bilateral treaty negotiations,” the second person cited above. Both spoke on condition of anonymity. The Ministry of Finance, the Departments for Promoting Industry and Internal Trade and Trade, and the Central Council of Direct Tax (CBDT) did not respond to inquiries sent by e -mail on Friday. In the previous two trade union budgets, India offered various concessions to US exporters of goods and services, including the reduction of customs duty and the deletion of equality levy on digital services provided by non-resident entities such as technical giant Google and Meta. New -Delhi is looking for a bilateral agreement with Washington before the US deadline deadline on July 9. The US wants India to significantly reduce the duties on US agricultural goods, dairy products and shrimp and remove non-tariff barriers that limit US dairy exports. Washington is also under pressure to ensure that the India-US trade succeeds before the deadline. A 26% reciprocal rate on Indian exports to the US, which includes the 10% universal baseline tariff that now applies to Indian exports, along with rates on imports from other countries, could increase retail price inflation in the US. The concerns about the impact of reciprocal tariffs on inflation are already best on the chairman of federal reserve chairman Jerome Powell, who refused to bend under pressure from President Trump to lower the measure of the benchmark. President Trump is doing rate cuts that could help lower government interest payments and budget deficits. Important takeaways India re-evaluates important policy on digital economy-inclusive digital competition and e-commerce framework bill-because it corresponds to ongoing trading conversations with the US. Policy time is calibrated to serve as leverage in negotiations, while the compliance burden on global technical firms is minimized. India has already made concessions, such as deleting equation levy, facilitating trade tensions and aligning with global tax norms. Broader regulatory clarity is prioritized, with concerns about cross -border data flow and foreign investment forming India’s cautious attitude. India’s cautious approach among the measures being reviewed is India’s proposed digital competition Bill that seeks to introduce a former or forward -looking approach to regulating the digital economy. This will instruct influential technical firms to follow a code of conduct. The draft bill, as it is now set up, will affect the ability of digital economy businesses to show targeted ads and the way people use Google services such as cards, reported last year on April 24 and June 7. The government is also reviewing the proposed rules for profit descriptions that must be set out by the Income Tax Department. It is intended to charge tax on non-resident businesses that have a ‘significant economic presence’ in India, defined by transaction value and user base. But India’s agreement with tax avoidance on taxes makes it difficult to tax these entities, as only those who are defined as a ‘permanent enterprise’ can be taxed here under the treaty. India has other efforts to tax technical giants that provide remotely to Indian customers by removing equation levy (6% on digital advertising and 2% on e-commerce) over the past few months to facilitate trade tensions with the US and to keep in line with the framework of OECD to judge tax base, a tax firm. “However, it still has domestic rules such as the Significant Economic Presence (SEP) concept and draft rules for profit attachment in terms of section 9 of the Income Tax Act and Rule 10. For the time being, the rules for profit engagement have not been made effective, and US businesses can still claim tax treaty benefits in the event of a Sep that has a Sep in India, unless they have a permanent business here,” said. On Saturday, Canada repealed a 3% tax on digital services on large technical companies that would come into effect on June 30. It was in response to Trump’s announcement Friday that he had cut off trade talks with Canada because he continued with this tax. E-commerce and FDI India’s proposed comprehensive comprehensive e-commerce policy, which has attracted a strong interest from global entities such as Amazon and Walmart, is another measure revised as the countries rethink priorities in the aftermath of an eventful regime change in the US. “It may not be the right time to continue with the e-commerce policy discussion, given the shifting global geopolitical scenario,” a senior government official said. India is also considering an adjustment of its direct foreign investment policy (FDI) in retail to allow foreign investment in stock construction, which is currently only allowed for domestic players. The idea is to enable US retailers to invest in warehouse infrastructure. The 2023 Digital Personal Data Protection Act has taken into account some of the concerns of digital economy businesses. “It is true that many discussions on issues such as the Digital Competition Bill and the E-Trading Policy have taken place. Some of these developments may also emerge during bilateral discussions with the relevant foreign governments,” said Amol Kulkarni, director of research at Cuts International, a non-profit, non-giving public interest issues. The timing and form of these policy developments can provide India leverage in these discussions, Kulkarni said. “It is that the government can achieve a fine balance in these discussions taking into account the need for policy security and predictability and the profits the general economy can get of specific policies,” Kulkarni said. “For example, the regulation of the flow of border data was subject to intense negotiation and the final framework in terms of the Digital Personal Data Protection Act 2023 was quite accommodating, but the requirements under the Digital Personal Data Protection Rules 2025 put some uncertainties, which could be said in the importance of policy certificate and predictability. After signing a major tariff agreement with China, President Trump also indicated a ‘big trade’ with India. Whether India’s movements so far, including the removal of equation levy and the break on controversial digital rules, are enough to soften the US attitude, still have to be seen, Maheshwari said. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Trade #india US Trade Read Next Story