Presentation by:- Dewang Mehta President NASSCOM Non-Tariff Trade Barriers in I.T Trade Experience of India WTO Information Technology.

Presentation by:-

Dewang MehtaPresident

NASSCOM

Non-Tariff Trade Barriers

in I.T TradeExperience of India

ww

w.n

ass

com

.org

WTO Information Technology Symposium

16 July 1999 Geneva

NASSCOM WTO

NASSCOM WTO

NASSCOMNational Association of Software

and Service Companies

NASSCOM WTO

NASSCOM

THE ONE STOP

REFERENCE ON SOFTWARE INDUSTRYIN INDIA

NASSCOM WTO

NASSCOMNot-for-Profit Association

“To Act as a catalyst for the growth of

software driven - IT industry in India”

NASSCOM WTO

NASSCOM Membership

3894

262

464520

0

100

200

300

400

500

600

1988 1992 1995 1997 1998

Home-Grown Companies

Multinationals

IT Software &ServicesCompany

NASSCOM WTO

www.nasscom.org

NASSCOM WTO

Indian Software Industry

Indian Software Industry

NASSCOM WTO

What is Common ?

NASSCOM WTO

NASSCOM WTO

SOFTWARE INDUSTRY IN INDIA

1124

41,9001755

63,1002700

100,400

3900

158,900

5650

240,000

1995-1996 1996-1997 1997-1998 1998-1999 1999-2000Projections

US$ MillionRs. Million

NASSCOM WTO

SOFTWARE EXPORT INDUSTRY

734

25200 1,085

39,0001,750

65,300

2,650

109,400

3,925

167,000

1995-1996 1996-1997 1997-1998 1998-1999 1999-2000Projections

US$ MillionRs. Million

NASSCOM WTO

INDIAN SOFTWARE EXPORTS

DESTINATIONS (1998 -99)

North America 61%

Australia &New Zealand 2%EUROPE 23%

WEST ASIA 1.5%

JAPAN 4%

SOUTH EAST ASIA

4%

REST OF THE WORLD4.5%

NASSCOM WTO

DOMESTIC SOFTWARE MARKET

US$ MILLION

Rs. Million

16,700

490

35,100

950

95-96 97-9896-97

24,100

670

1,200

49,000

98-99 1999-2000Projections

1,725

73,000

NASSCOM WTO

THE INDIAN SOFTWARE COMPETITIVE ADVANTAGES

“ COST EFFECTIVE - HIGH QUALITY ”

MATHEMATICAL & LOGIC EXPERTISE

2nd LARGEST ENGLISH - SPEAKING SCIENTIFIC MANPOWER RESERVOIR IN THE WORLD

HIGH SPEED (SATELLITE) DATACOMMUNICATION AND VALUE ADDED SERVICES FOR SOFTWARE DEVELOPMENT (64 KBPS, 2MBPS AND ABOVE)

NASSCOM WTO

OFFSHORE SOFTWAREDEVELOPMENT

USAUK

INDIA

JAPAN

SINGAPORE

NASSCOM WTO

Mode of Delivery

• Off-Shore Development (Through high-speed Datacom Satellite Links)

• On-Site Services(Through movement of Natural Persons)

• Physical Deliveries (Through packages on floppies, CD’s etc.)

Indian Software Exports

NASSCOM WTO

• Zero Duty on import of Software• India is signatory to ITA• Zero Duty on all I.T. Product by 2003

Imports of I.T. into India

NASSCOM WTO

THE INDIAN SOFTWARE ABILITY TO HANDLE LARGE

PROJECTS

HIGH GROWTH IN EXPORT AND

DOMESTIC MARKET

NO IMPORT DUTIES ON

SOFTWARE

TOUGH IPR LAWS

USE OF STATE-OF -THE- ART

TECHNOLOGIES

VIRTUAL SOFTWARE

ORGANISATIONS

(SOFTWARE FACTORIES)

NASSCOM WTO

COST & QUALITY ADVANTAGES

HIGHHIGH

COST

COST

LOWLOW QUALITYQUALITY HIGHHIGH

CURRENT POSITION

INDIAINDIA

• IRELANDIRELAND

• ISRAELISRAEL

• SINGAPORESINGAPORE

• PHILIPPINESPHILIPPINES

• HUNGARYHUNGARY

• CHINA (PRC)CHINA (PRC)

NASSCOM WTO

INDIA IS BEST POSITIONED FOR CROSS BORDER IT SERVICESV

endo

r S

oph

isti

cati

on

People Sophistication

ChinaCIS

Mexico

India

The Philippines

Source: McKinsey Analysis

Low High

High

INDIA HAS A NUMBER OF SOPHISTICATED VENDORS

115

70

91

24

0

20

40

60

80

100

120

Certified CertificationUnderway

(Dec '99)

CertificatioPlanned

(Dec '2000)

Balance

As of March 1999

Top 300 Companies

Certified Companies in India

NASSCOM WTO

Issues in I.T. Trade

Movement of Natural Persons

Wage Parity Insisted upon

Universal Recognition of Qualifications

Double taxation of Social Security

Deduction of Withholding Tax

Intellectual Property Rights

E-Commerce

NASSCOM WTO

I.T. Trade with USA

India Exported I.T. Software and

Services worth US$ 1.7 Billion to U.S.A

during 1998 - 99 (Total Indian Software

Export was worth US$ 2.65 billion)

India Imported I.T. Products from U.S.A

worth US$ 2.5 Billion during 1998-99

NASSCOM WTO

Problems in I.T Trade with USA

H-1B Visa Global cap not sufficient

Wage parity insisted upon by U.S.A

(Discriminating)

Double taxation of Social Security

(no benefits to Indian Employees)

Discriminating Labour Laws

Non-Tariff Trade Barriers

NASSCOM WTO

I.T. Trade with USA

Situations has improved since 1993

Suggestions for further improvement More H-1B Visas required

Transparency in Visa Program

Totalisation Agreement to be signed

Amendment to labour Laws in U.S.A

No insistence of wage parity

NASSCOM WTO

I.T. Trade with Europe

India Exported I.T. Software and

Services worth US$ 580 Million to Europe

during 1998 - 99 (Total Indian Software

Export was worth US$ 2.65 billion)

India Imported I.T. Products from

Europe worth US$ 900 Million during

1998-99

NASSCOM WTO

Problems in I.T Trade with Europe

No Transparency in Visa Program

Movement of Natural Person restricted

Double taxation of Social Security

Opening of office is a problem

Delay in Work Permits

NASSCOM WTO

I.T. Trade with Europe

More transparency required in Visas and

Work Permit

Movement of Natural Person (for trade)

should be treated separately from normal

Immigration rules

No insistent of Wage Parity in some

countries

Universal recognition of qualifications

NASSCOM WTO

I.T. Trade with Japan

India Exported I.T. Software and

Services worth US$ 100 Million to Japan

during 1998 - 99 (Total Indian Software

Export was worth US$ 2.65 billion)

India Imported I.T. Products from Japan

worth US$ 500 Million during 1998-99

NASSCOM WTO

Problems in I.T. Trade with Japan

Work Permits

Witholding Tax

NASSCOM WTO

“ Removal of Non-Tariff Trade Barriers in I.T.

Trade should be part of ITA - II”

NASSCOM WTO

Government of India Policies are IT friendly

• Income Tax exemption for Software and Services Export

• Zero duty on Import of Software

• Special Scheme - Software Technology Parks (STP)

• IT on National Agenda

• State Government I.T. Policies

NASSCOM WTO

PROJECTIONSINDIAN SOFTWARE

INDUSTRY

6

35

10

50

16

85

0

1020

30

4050

60

7080

90

2002 2008

DomesticExport

Total

In U

S$

Bill

ion

NASSCOM WTO

www.nasscom.org

NASSCOM WTO

For more details on me

www.dewangmehta.com

Thank You