Google tax: India mustn’t give up on a fair global taxation regime

Subscribe to enjoy similar stories. India’s government seems set to drop its 6% equalization levy on online advertising services rendered to Indian advertisers by offshore digital businesses. This so-called ‘Google tax’—since it impacted this US-based web-search company perhaps the most, though also others like Meta and X—was introduced in 2016, but is abruptly being withdrawn just days before US President Donald Trump’s reciprocal tariffs go into force from 2 April.

What this move is expected to yield, however, remains unclear. As a giveaway to US Big Tech firms that make money off India’s market through borderless operations, the purpose might be to show flexibility in trade talks with America, expected to revolve around business interests. But are we giving up too much too soon? This would not be India’s first concession.

In August, New Delhi axed a 2% levy on e-commerce transactions, while the Union budget for 2025-26 slashed import duty on high-end vehicles that Trump is known to bat for. Given the US president’s latest threat to erect steep import barriers against any country that buys oil and gas from Venezuela, we may be pushed to choke off Venezuelan crude supply. While the Google-tax reversal looks like another peace offering, in going down this path, India must not lowball itself.

We still lack clarity on how Trump’s tariffs will apply. If the US matches Indian rates item-for-item, there may be little for us to lose, as the items we export to it do not overlap much with what we import from it. As Washington has yet not publicly stated what shape its trade barriers will take, and it has held off punitive levies on the imports of some countries, there may be scope for a reprieve—or even a grand bargain.