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  1. Non-Tariff Trade Barriers in I.T Trade www.nasscom.org Experience of India WTO Information Technology Symposium 16 July 1999  Geneva Presentation by:- Dewang Mehta President NASSCOM

  2. NASSCOM WTO

  3. AFTER ALL INDIA INVENTED NUMERAL ZERO ?!? 0 1 0 1 0 1 0 1 0 1 0 NASSCOM WTO

  4. NASSCOM National Association of Software and Service Companies NASSCOM WTO

  5. NASSCOM THE ONE STOP REFERENCE ON SOFTWARE INDUSTRY IN INDIA NASSCOM WTO

  6. NASSCOMNot-for-Profit Association “To Act as a catalyst for the growth of software driven - IT industry in India” NASSCOM WTO

  7. NASSCOM Membership Home-Grown Companies Multinationals IT Software & Services Company NASSCOM WTO

  8. www.nasscom.org NASSCOM WTO

  9. Indian SoftwareIndustry NASSCOM WTO

  10. What is Common ? NASSCOM WTO

  11. NASSCOM WTO

  12. SOFTWARE INDUSTRY IN INDIA 240,000 US$ Million 158,900 Rs. Million 100,400 5650 3900 63,100 2700 41,900 1755 1124 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 Projections NASSCOM WTO

  13. SOFTWARE EXPORT INDUSTRY 167,000 US$ Million 109,400 Rs. Million 3,925 65,300 2,650 39,000 1,750 25200 1,085 734 1999-2000 Projections 1995-1996 1996-1997 1997-1998 1998-1999 NASSCOM WTO

  14. REST OF THE WORLD North America 61% 4.5% SOUTH EAST ASIA 4% JAPAN 4% WEST ASIA 1.5% Australia & New Zealand 2% EUROPE 23% INDIAN SOFTWARE EXPORTS DESTINATIONS (1998 -99) NASSCOM WTO

  15. DOMESTIC SOFTWARE MARKET 73,000 US$ MILLION 49,000 Rs. Million 35,100 1,725 1,200 24,100 950 670 16,700 490 1999-2000 Projections 95-96 98-99 96-97 97-98 NASSCOM WTO

  16. THE INDIAN SOFTWARECOMPETITIVE 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

  17. OFFSHORE SOFTWAREDEVELOPMENT UK JAPAN USA SINGAPORE INDIA NASSCOM WTO

  18. Indian Software Exports 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.) NASSCOM WTO

  19. Imports of I.T. into India • Zero Duty on import of Software • India is signatory to ITA • Zero Duty on all I.T. Product by 2003 NASSCOM WTO

  20. 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

  21. COST & QUALITY ADVANTAGES HIGH • IRELAND • ISRAEL COST • SINGAPORE INDIA • CHINA (PRC) CURRENT POSITION • PHILIPPINES • HUNGARY HIGH LOW QUALITY NASSCOM WTO

  22. INDIA IS BEST POSITIONED FOR CROSS BORDER IT SERVICES High India The Philippines Vendor Sophistication China CIS Mexico High Low People Sophistication Source: McKinsey Analysis

  23. INDIA HAS A NUMBER OF SOPHISTICATED VENDORS Certified Companies in India Top 300 Companies As of March 1999 NASSCOM WTO

  24. 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

  25. 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

  26. Problems in I.T Trade with USA Non-Tariff Trade Barriers • 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 NASSCOM WTO

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. Problems in I.T. Trade with Japan • Work Permits • Witholding Tax NASSCOM WTO

  33. NASSCOM Recommends “ Removal of Non-Tariff Trade Barriers in I.T. Trade should be part of ITA - II” NASSCOM WTO

  34. 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

  35. 85 90 Domestic 80 Export 70 Total 50 60 50 In US$ Billion 35 40 30 16 20 10 6 10 0 2002 2008 PROJECTIONS INDIAN SOFTWARE INDUSTRY NASSCOM WTO

  36. www.nasscom.org NASSCOM WTO

  37. For more details on me www.dewangmehta.com

  38. Thank You