The United States Trade Representative (USTR) has initiated Section 301 Investigations of Digital Services Taxes (DST) against several countries, including India, for having "unfair or discriminatory" laws "negatively" impacting US businesses.
Stating that the country is ready to take appropriate action to defend its businesses and workers against any such discrimination, USTR Robert Lighthizer said, "President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies".
The US has raised concerns over India's efforts to raise tariffs for digital sales and advertising platforms and other US-based OTT channels such as Amazon and Netflix.
In March, India adopted a 2 percent digital services tax aimed at levying a 2 percent rate on revenues of e-commerce operators and suppliers. The new policy came into effect last month.
Washington's move to launch an investigation, which could invite punitive tariff sanctions, includes probes against others such as Austria, Brazil, the Czech Republic, the European Union, Indonesia, Italy, Spain, Turkey, and the United Kingdom.
Trade ties between the US and India came under immense strain when the former accused New Delhi of putting "unacceptable and high" tariffs on the country.
During his first official visit to India earlier this year, Trump said, “We are being charged a large number of tariffs. If they want a deal with us, they will agree. Harley Davidson has to pay the tremendous tariffs in India but that's not the case when India sends its motorcycles to the US. There is almost no tariff".
The US president has stated that the much-talked about trade deal between the countries may materialise by the end of the year.
For the last two years the nations have been engaged in hammering our their differences on issues related to medical equipment, agricultural products, and dairy-related items. The Trump administration revoked the special subsidy benefits under the Generalised System of Preference programme to India worth over $5.6 billion annually last June. India, for its part, retaliated with high value tariffs on 28 American products.