By Arpita Mukherjee, Professor, ICRIER
India is one of the global leaders in digitally delivered services and goods trade through e-commerce. The government has taken several measures to promote small and medium enterprise exports through online platforms at a time of global trade uncertainty. As the World Trade Organization (WTO) approaches its next Ministerial Conference (MC14) next week in Cameroon, debate intensifies on India’s position regarding the moratorium on e-commerce. Should India secure its export interests and shift from a naysayer to a decision-maker, or continue aligning with South Africa and Indonesia, even if they shift positions for key markets like the US?
Discussions on e-commerce began in 1998 with the establishment of the Working Programme on E-commerce (WPEC) at the WTO. Members agreed to a “moratorium”—no customs duty on electronic transmissions. This has been renewed at each Ministerial Conference and was extended in MC13 until MC14 or March 31, when both the moratorium and WPEC are set to expire. Progress on trade rules within WPEC has been limited, raising questions about its survival.
What began as a temporary arrangement has, over nearly three decades, underpinned the expansion of the digital economy and India’s exports. India has opposed a permanent moratorium, arguing that the definition of e-commerce is still evolving and duties cannot be permanently waived for a sector that remains undefined. Concerns have also been raised about tariff revenue losses for developing countries. Yet, India has struggled to build support, as many developing nations have joined the Joint Statement Initiative (JSI) on e-commerce. On July 26, 2024, 80 JSI members reached consensus on trade rules in a “stabilised text”. Key exceptions are India and the US, with Washington treating the moratorium as a bargaining tool in its trade agreements.
Stakes for a digital economy
As one of the fastest-growing digital economies, India has a high stake in global trade rules. Electronic transmissions cover software downloads, cloud services, design files, research data, and cross-border digital services. In 1998, e-commerce was largely confined to digitally ordered goods and some services. Today, digitally delivered goods and services are ubiquitous, yet WPEC has not reached consensus on scope or definition.
Trade agreements, however, have attempted definitions of e-commerce in digital trade chapters. India has digital trade chapters with the United Arab Emirates, the UK, and the European Union. WPEC discussions remain crucial to keep e-commerce on the multilateral agenda, especially since JSI’s status as plurilateral is unclear. The US has not joined JSI but remains part of WPEC. The moratorium has enabled businesses, especially smaller firms, to access platforms and markets without layered border taxes. If countries begin levying duties on digital transmissions, micro, small, and medium enterprise (MSME) exporters could suffer in an increasingly protectionist world.
The India AI Impact Summit 2026 in New Delhi showcased India’s ambition to become a hub for responsible, human-centric AI innovation. It highlighted how technology can drive inclusive growth across the Global South and demonstrated India’s readiness to take leadership roles in global digital trade policymaking. India is already agreeing to zero tariffs under multiple trade agreements, so tariffs can no longer be treated as an import shield.
Revenue concerns
The principal argument against the moratorium is fiscal/custom revenue loss. Some studies (such as United Nations Trade and Development [UNCTAD] studies by Banga, 2019 and 2021) estimated that developing countries forgo potential tariff revenues from digital imports. Countering this, ICRIER Working Paper (WP) 426 found that the UNCTAD studies included goods where India has a positive trade balance and/or is a net importer where tariffs are already zero or low under existing free trade agreements. Thus, the argument is technically weak for India. With more trade agreements, more digital products will likely be duty-free.
With government focus on electronics exports, global capability centres, and revival of special economic zones, India should prioritise removing export barriers. Imposing customs duties on intangible digital transmissions would also pose serious administrative challenges. Indonesia attempted to create a separate HS code, without success. ICRIER WP 426 argued that domestic tax/goods and services tax is a more effective revenue collection method than customs duty.
India is investing heavily in semiconductor design, advanced manufacturing, artificial intelligence development, and digital public infrastructure. These ambitions depend on integration into global supply chains and access to digital ecosystems. Timing is critical. While the US threatens tariffs, India is positioning itself as a trusted digital partner. Supporting the moratorium could strengthen India’s image as a transparent market, especially as global firms seek secure supply chains and evaluate long-term investments.
A balanced path forward
Supporting the continuation of the moratorium does not mean accepting ambiguity. India should use upcoming negotiations to push for clarity on what constitutes an “electronic transmission” and how it should be treated within WTO frameworks. Clear definitions would reduce disputes and provide greater legal certainty.
At the same time, India can advocate complementary measures to ensure developing countries benefit from digital trade. This includes strengthening capacity-building provisions, facilitating technology access for MSMEs, and improving digital infrastructure financing.
Trade rules must evolve with technology. Abrupt reversals that introduce uncertainty into digital commerce would be a step backward. The WTO moratorium has provided stability during the formative decades of the digital economy.
India should support its continuation—while pressing for clarity, fairness, and developmental safeguards. Doing so would reinforce India’s role as a responsible digital leader and protect the interests of developing economies seeking growth through integration, not isolation.
The question before policymakers is not whether digital trade will expand. It will. The question is whether India chooses to shape that expansion from within the system or risks standing at its margins.