Some furniture could face 25% duties in Section 301 India investigation

A government investigation into India’s taxation of digital services could result in duties of 25% on more than two dozen Indian-sourced products including bedroom furniture and seating.

However, the Office of the United States Trade Representative plans to suspend imposing the duties up to a period of 180 days, or up to Nov. 29, 2021 to allow for additional time for multilateral or bilateral discussions that could resolve the matter. If the USTR determines that this period should be less than 180 days, it will issue another notice involving the imposition of duties.

At present the debate is addressing India’s Digital Services Tax, which imposes a 2% tax on revenues generated from digital services offered in India, including digital platform service, software as a service and several other categories of digital services.

The USTR found in January that the tax is unreasonable or discriminatory and thus burdens or restricts U.S. commerce. In June, the USTR said it was considering imposing duties of 25% on 26 individual product categories.

The list includes the following furniture products:
   1. Seats nesoi (not elsewhere specified or included), of bent wood (HTSUS code 9401.69.20)

   2. Chairs nesoi, with teak frames, not upholstered (9401.69.40)

   3. Chairs nesoi, with wooden frames, other than teak, not upholstered (9401.69.60)

   4. Seats (other than chairs) nesoi, with wooden frames, not upholstered (9401.69.80)

   5. Furniture (other than 9401 or 9402) of bentwood nesoi, of a kind used in the bedroom (9403.50.40)

   6. Furniture (other than 9401 or 9402) of wood (other than bentwood) of a kind used in the bedroom and not designed for motor vehicle use (9403.50.90)

   7. Rattan furniture and parts thereof (9403.83.00)

The USTR said these and other product categories targeted for a 25% duty had an estimated trade value of $119 million in 2019, which compares to the $55 million value of the DST that U.S. companies pay India per year.

In 2020, India shipped $347.6 million in furniture, including case goods, seating and bedding to the U.S., down 8% from the $376.8 million it shipped to the U.S. in 2019. The top categories include miscellaneous wood furniture such as occasional, entertainment and office furniture, furniture of other materials such as woven materials, wood dining tables, wood bedroom furniture and metal, non-upholstered seats.