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Thursday, August 28, 2025

India's IT services firms could look to Gulf as US hints at digital tariffs

تم إعداد هذا المنشور من قبل فيجاي فاليتشا

India's IT services firms could look to Gulf as...

Vijay Valecha, August 28, 2025, The National

US President Donald Trump has hinted at retaliating against countries that tax digital services from American technology companies. That could be a problem for a nation such as India and its stable of tech players.

The US has already caused a ruckus among its trading partners with sweeping tariffs, which cover hard goods and exempt services. But there is a precedent for taxing the latter, courtesy of the EU's digital tax regime implemented this year.

Mr Trump has railed against what he sees as unfair treatment of American tech companies – the likes of Apple, Google and Microsoft – and has fired a warning that he may follow the EU's lead.

While the US remains the world's biggest exporter of services, India's technology sector has carved its own niche and has a substantial business and expat base in America that could run into speed bumps, tariffs pending.

Unfamiliar territory

Already hit with US tariffs of 50 per cent – the highest for any Asian nation – India also faces having to work out how to handle levies on services, should it come to fruition.

While the US tariffs are driving a sharp strategic divide across India’s export sectors, its IT services continue to expand globally, driven by its pool of skilled and cost-effective talent.

However, the indirect impact of these tariffs, or potentially a new set of tariffs on services, could severely disrupt India’s tech giants such as Tata Consultancy Services, Infosys and HCL.

In their latest quarterly reports, Tata Consultancy Services and HCL generated about 51 per cent and 56.5 per cent, respectively, of their revenue from the US, while Infosys gained 56.5 per cent its revenue from North America.

“This clearly indicates the level of dependence of these Indian IT giants on the US, making any potential tariffs a significant threat to revenues,” Vijay Valecha, chief investment officer of Dubai-based Century Financial, told The National.
“With higher import tariffs across the board in the US, general business operations may face higher input costs, which could lead to lower spending on outsourcing technology services to India,” Mr Valecha added.

India may already have a blueprint: its gold and jewellery industry, among those facing a big hit from the tariffs, has already pivoted to the Gulf – a place Indians know well.

Familiar ground

The Gulf presents an opportunity, especially as its largest economies have established decades-long relations with India, forming the base for consistent investment and the influx of talent.

Indian tech companies, including Infosys, Wipro and Tata Consultancy Services, have long had a footprint in the region. This is especially true of the UAE, the Arab world's second-biggest economy, which has technology at the forefront of its ambitious, innovation-driven economic goals.

Source:

The National

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