MAYASIA BUSINESS OUTLOOK9particularly high-value technology-oriented business exporting services and research & development services. Modern service exports now account for roughly 70 percent of India's total service exports. This is much above that of other emerging markets. India's services exports, however, have diversified less than the country's exports of goods, despite their high level of sophistication, and they have focused predominantly on high value computer-related exports.Nurturing Growth in Digital TradeIndia has created the world's first digital ID infrastructure, which is already transforming online services, particularly those provided by the government. However, India, like other emerging markets, must continue to invest in domestic digital infrastructure, particularly through technology and digital skills education. Externally, it must ensure access to global data flows.Among domestic reforms, the passing of the GST Bill is a vital step forward in many ways. Most importantly, its implementation should eliminate the inconsistency between the taxation of goods and services, which has been a challenge to the classification of digital downloads and flows in India. It will also remove the differences in state levies and restrictions on interstate movements. So far, India's modern services have grown despite the complex interstate regulatory structure, indirect tax laws that don't recognize the evolving business models of the modern services sector, and the ambiguity of interstate tax laws. Removing these barriers is vital to the future potential of the sector, and a consultative approach with the modern services sector and the states will be required to implement the GST and the linkages with supply and registration rules.India Digital Trade Relation with other Asian countriesIndia Digital trade services represents the next frontier in economic development in the Indo-Pacific and is a potential engine for significant growth for Southeast Asian countries. The significance of this growth in connectivity and the resultant adoption of digital services is reflected in its economic impact. The report found that Southeast Asia's internet economy expanded five percent between 2021 and 2022, reaching approximately $120 billion. This represents a key area of opportunity amid slowdowns in education, travel, tourism, and other sectors impacted by the pandemic. Furthermore, the Covid-19 pandemic has only increased demand for digital banking services, as governments have sought alternatives to cash to deliver financial assistance. Consequently, a digital trade pact with the US could unleash the potential of what is already a fast-growing sector. It could bring manifold benefits to Southeast Asian countries that seek to diversify their economies and climb-up the value chain.Final NotesGlobally, the flow of digital goods and services has increased, putting more upward pressure on productivity and growth. According to the Digital Trade Report, India is experiencing remarkable economic growth while addressing various socioeconomic challenges. As India's prominent position in the global and regional economies, there is an opportunity for India to play a leading role not only at home, but also abroad in driving the development of digital trade rules that will enable the country to capture the digital dividend when negotiating bilateral and multilateral trade agreements.
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