A few weeks back, something important slipped under the radar. India scrapped the 6% Equalization Levy, a digital ad tax meant to ensure global tech giants like Google, Meta, and Amazon paid at least some tax on revenue earned from Indian users. On paper, it looks like a diplomatic concession to the U.S. in ongoing trade negotiations. But the bigger message is clear: taxation alone isn’t enough. India is too late to use levies as a weapon against digital dominance.
To be fair, the original intent behind the levy was solid. But it came too late, was implemented in isolation, and lacked a broader strategy. By now, the key layers of India’s digital economy, discovery, attention, payments, are already in the hands of global platforms. These companies have built deep moats through user data, advanced ad targeting, and app ecosystems that are nearly impossible to unseat with just a tax.
Still, removing the levy isn’t necessarily a loss. If anything, it’s a wake-up call. Because the truth is, even our most patriotic Indian startups run on foreign infrastructure: AWS, Google Cloud, Facebook Ads, Microsoft products, and Apple/Google app stores. Ironically, the levy also added cost burdens to these same Indian companies, weakening their competitiveness.
Every click on YouTube, every rupee spent on Google Ads those are profits flowing abroad, lightly taxed, and reinvested in foreign R&D, foreign jobs, and foreign power. India needs to move on from short-term solutions like this tax and shift to long-term digital self-reliance.
Think about it: we regulate finance, insurance, and telecoms with bodies like SEBI, RBI, and TRAI because they’re systemic. But somehow, we’ve let global digital platforms who influence elections, opinion, mental health, and public discourse go largely unchecked. Their algorithms are black boxes. No transparency. No accountability. No recourse.
This is no longer just an economic issue. It’s a national security risk.
The real pivot India needs is clear: move from defensive taxation to proactive digital sovereignty. Here’s what that looks like:
1. Set up a dedicated Digital Regulator. Just like SEBI or TRAI, we need a powerful watchdog to set rules for algorithmic fairness, data governance, competition, and user protection.
2. Enforce algorithmic transparency. Platforms must reveal how they rank, promote, or suppress content especially when it comes to news, politics, or commerce.
3. Mandate interoperability. Allow Indian startups to plug into existing ecosystems. Consumers should be able to switch services or migrate data without friction.
4. Enforce strict data localization and reciprocity. User data generated in India should stay in India. No free ride for foreign firms who want to mine our digital wealth without giving anything back.
5. Use public procurement as leverage. Just like we “Buy Indian” in defense, the government should direct digital ad spend, cloud usage, and software adoption toward Indian platforms.
6. Support domestic digital infra players. Offer grants, tax breaks, and R&D support for companies building Indian alternatives in ad tech, SaaS, e-commerce infra, and more.
Removing the levy is not surrender. It is clarity. It’s an overdue recognition that we’re fighting the wrong battle. The goal isn’t to tax our way to power. It’s to build. Build sovereign infrastructure. Build rules that protect our interests. Build a future where India isn’t just a market but a maker.
And let’s not forget the global context.
The U.S. already extends its digital power globally through laws like the FCPA, the CLOUD Act, and the Stored Communications Act. These laws allow the U.S. to access data, police conduct, and enforce its will beyond its borders all under the banner of good intentions. But they raise valid concerns about fairness and economic overreach. If the U.S. is willing to defend its digital sovereignty so aggressively, shouldn’t we?
It’s time India treated digital as a core sector like energy or defence. The path forward is clear: not more taxes, but more control. Not protectionism, but proactive strategy. The real war is for digital autonomy, innovation, and long-term power. Let’s stop playing on the defensive here and start building.
Yash Tambawala 