India has signalled it may drop its opposition to the extension of a global agreement to not impose tariffs on electronic transmissions such as digital downloads and streaming, two senior diplomats said. India's Commerce Minister Piyush Goyal had on Thursday cast doubt on U.S. efforts to permanently extend the moratorium - which is set to expire this month - during a World Trade Organization meeting in Cameroon this week, saying it warranted "careful reconsideration."

However, India late on Friday night indicated to WTO members it would agree to an extension of two years, two senior diplomatic sources said, in the first sign of an opening in its position, ahead of the WTO meeting on the matter on Saturday. It is unclear, however, if a short-term extension would be satisfactory to the U.S. The U.S. trade Representative Jamieson Greer said on ‌Thursday Washington was not interested in a temporary extension to the ban, only a permanent one.

Business leaders say an extension is critical to guarantee predictability, fearing duties could be introduced if the agreement lapses.

Two senior diplomats said U.S. and Indian positions were still far apart.

A third senior diplomat said that members are trying to forge a middle path of extending the moratorium beyond the next ministerial meeting - between five and 10 years. It was uncertain if the U.S. or India would accept a middle ground, they added. The extension of the e-commerce moratorium during the WTO meeting in Yaounde is being seen as a key test for the global watchdog's relevancy, following a year of tariff-fuelled trade turmoil and major disruption to shipping, energy prices and supply chains due ‌to the Middle East conflict.

"I think for some countries it's actually quite existential to prolong the moratorium for a significant time," Norwegian Foreign Minister Espen Barth Eide said, adding it would help demonstrate that ministers were able to deliver something concrete at the meeting in Yaounde.

For nearly three decades the e-commerce moratorium has been continually extended until the next ministerial conference. The U.S. wants major American tech businesses such as Amazon, Microsoft and Apple to have a stable regulatory environment without the fear and costs of countries introducing duties that could impact cross-border digital trade.