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
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NASSCOMNot-for-Profit Association
“To Act as a catalyst for the growth of
software driven - IT industry in India”
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NASSCOM Membership
3894
262
464520
0
100
200
300
400
500
600
1988 1992 1995 1997 1998
Home-Grown Companies
Multinationals
IT Software &ServicesCompany
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www.nasscom.org
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Indian Software Industry
Indian Software Industry
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What is Common ?
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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
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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
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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%
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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
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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)
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OFFSHORE SOFTWAREDEVELOPMENT
USAUK
INDIA
JAPAN
SINGAPORE
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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
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• 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
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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)
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COST & QUALITY ADVANTAGES
HIGHHIGH
COST
COST
LOWLOW QUALITYQUALITY HIGHHIGH
CURRENT POSITION
INDIAINDIA
• IRELANDIRELAND
• ISRAELISRAEL
• SINGAPORESINGAPORE
• PHILIPPINESPHILIPPINES
• HUNGARYHUNGARY
• CHINA (PRC)CHINA (PRC)
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Problems in I.T. Trade with Japan
Work Permits
Witholding Tax
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“ Removal of Non-Tariff Trade Barriers in I.T.
Trade should be part of ITA - II”
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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
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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
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For more details on me
www.dewangmehta.com
Thank You