Mint Snapview: India must flex its digital-market muscle to counter Trump tariffs

Mint

2 days ago

Yesterday, on the Vande Bharat Express from Mysuru to Bengaluru, I watched a fellow passenger—a young woman in her late twenties, working at a financial global capability centre (GCC) in the city—hunched over her laptop, feverishly using GPT-5 barely hours after its midnight release.
She told me she makes about ₹1 lakh a month, yet spends $200 every month on her ChatGPT Pro subscription. Many of her colleagues, too, she added, are on different paid plans.
In a country where per-capita income hovers at around $2,700 a year, here was a professional willing to spend nearly 10% of her monthly salary on a single AI tool—not as a luxury, but as a competitive necessity.
Multiply that by the millions of Indians engaging with these systems daily, and you begin to see the invisible export: billions of unpaid, unpriced data points—prompts, clicks, scrolls—training the algorithms that will run tomorrow's AI-driven economy.
India now has more ChatGPT users than any other country. And OpenAI isn't alone. From Google to Meta, dozens of the world's largest tech platforms have their biggest user bases here. Even if per-user revenue is lower than in the US, the volume and intensity of Indian usage make this market central to the global AI learning loop.
It doesn't stop with consumer use. In Bengaluru, Hyderabad, Pune, and Gurugram, American and European multinationals have quietly concentrated 40-50% of their global engineering, R&D, and operational headcount inside Indian GCCs. Nvidia's CEO admits nearly half of its R&D staff is here. Cisco calls India its 'second global headquarters". JPMorgan's Indian offices are among its largest globally. This is not outsourcing in the 1990s sense—this is embedded capability, built over 25 years, that no other country can replicate quickly.
And yet, we blink first
On 7 August, Mint reported how New Delhi's first reaction to US President Donald Trump's unilateral 50% tariff hike on Indian exports was to frame it as 'a phase we have to overcome" and speak vaguely of finding new markets. Missing entirely was a plan to use the leverage we already hold.
The retreat began months earlier. On 28 March, as the Financial Times reported, the government quietly scrapped the 6% 'Google tax" on online ads —one of the few tools designed to make Big Tech pay for extracting value from India without a physical presence here. This followed 2024's repeal of a separate 2% equalization levy after US complaints that it was 'discriminatory and unreasonable".
The timing was deliberate: a pre-emptive signal of goodwill days before Trump's tariffs took effect. FT even noted that 'Trump loves to hear that his pressure is working". The real-world effect: Google, Meta, Amazon, Microsoft, AWS, SAP, PwC, and KPMG all get a cheaper ride in the world's largest open digital market, with the costs of market access dropping to zero.
Reciprocity, not concession
This is exactly backwards. In a moment of tariff escalation, the logic should be reciprocity, not concession. If the US can double duties on our textiles and seafood overnight, India can and should consider:
• A 20-25% minimum tax on US tech, consulting, cloud, and IP-licensing revenues earned here.
• Transfer pricing reform for GCCs: if 40-50% of the work happens in India, we should extract fair value—not the token 'cost + 5%" that many firms record today, but 'cost + 50%". That's the difference between accepting a service-centred mark-up and pricing India's role as a core profit centre in these companies' global operations.
The reflexive fear is that American companies will 'unplug" Indian IT services if we push back. That is a myth. Two decades of operational maturity, scale, and cost advantage mean there is no readymade Poland, Israel, or Midwestern US waiting to absorb those millions of engineer-hours.
The contrast with China is stark: Beijing buys ' ₹0 worth" of these services and locks its market down; India's openness is the prize. We act as if this makes us vulnerable; in reality, it makes us indispensable.
The levers we refuse to pull
The market. The talent. The daily, unpaid contribution of hundreds of millions of Indian users to the training of global AI models. These are assets no tariff can touch—unless we choose not to use them.
Right now, our negotiation posture is defensive, even apologetic. We dismantle taxes meant to make Big Tech pay its share and hope it buys goodwill. Washington plays hardball; we play nice. That is not a recipe for parity.
A different playbook
Trade talks are not charity auctions. The willingness to walk away is often the most powerful tool in the room. When we remove a tax to please Washington, we should ask: What are we getting in return? If the answer is 'nothing yet", we have already lost.
India's digital market, engineering workforce, and user-generated data are as strategic as its pharmaceuticals or textiles. The day we start treating them that way—pricing them fairly, taxing them reciprocally, and putting them squarely on the negotiating table—is the day we stop negotiating from a position of weakness.
Until then, we'll keep watching our fellow passengers on the Vande Bharat Express train the world's AI for free, while the bill for their value creation is paid somewhere else.
Pankaj Mishra is a journalist and co-founder of FactorDaily. He has spent over two decades reporting on technology, startups, and work in India with a focus on the people and places often left out of the spotlight.