Piracy Could Hurt Indian Exports to the US— AMCHAM India

Against the backdrop of the latest US Law against Unfair Competition, the American Chambers of Commerce released a statement on the implications of the law on Indian exports. As per BSA Global Software Piracy Study, IT theft exceeds (US) $63 billion worldwide, which hurts economic growth, job growth, investment, and incentives for innovation in most regions, markets and businesses. The Unfair Competition Law has been passed in 2 states -Louisiana & Washington, the Attorney General announcements of California and Massachusetts are under the ‘Unfair Competition law' of these states. The other 36 states are seeking ways to use the traditional powers of their office to address the unfair competition advantage and taking actions under existing Fair Competition acts. These growing enforcement actions are a logical and welcomed step toward the call made by U.S. officials to curb unfair competition and ensure a level global playing field for suppliers and manufacturers.

USA has traditionally been a prominent market for India, with exports across sectors increasing from $ 5014.48 million in 1995 to $ 19493 million by the end of 2010. Now, this law becomes decisive of the overall export performance and in turn a major determinant in economic growth of the country.

• India forms about 4% of the total textile products imported into the US. The fact that imports to US have been increasing annually by 3-4% from 2007-11, suggests there is growing potential for India to capitalize on.
• India forms about 12.2% of the total Gems and Jewellery products imported into the US. Imports to US have been increasing annually by 8% from 2007-11.
• India forms about 2.8% of the total leather products imported into the US. Imports to US have been increasing annually by 2% from 2007-11.
• India forms about 3.6% of the total Organic Chemicals products imported into the US. Imports to US have been increasing annually by 3% from 2007-11.

However, as the first enforcement action by a U.S. lawmaker against an Indian company that is alleged of using pirated software, the Pratibha Syntex lawsuit puts forward a clear call for compliance. There is a crucial lesson here, in that exporters from India across verticals can now legitimately be barred from accessing the U.S. marketplace. Failure to comply could result in loss of access to the lucrative US markets and injunctions against sales. This certainly translates into a significant negative impact on a business and its bottom line.

"Today, the global economic situation is forcing governments around the world to look at enforcing laws that provide a fair ground for competition. The US law against ‘unfair competition' is another step in this global trend. US being a key export market for India, it is critical that exporters review the software used in their supply chains to ensure license compliance and abide by the law. For the countless manufacturers in the country risking loss of trade is simply not an option," said Ajay Singha, Executive Director, American Chambers of Commerce." "This law should be viewed with optimism as they render India an opportunity to compete better in the world market by being a compliant nation while ensuring the overall growth and wellbeing of the domestic economy," he further added.

Is there a way for India to take advantage?
It is important to note that this is a movement against the use of illegal IT and in that perspective it opens a window of opportunity for India. Taking the example of the neighbouring countries like China and Bangladesh : China is one of the fastest growing technology markets in the world but is also home to rampant software piracy. China's illegal software market was worth nearly $9 billion in 2011 making its piracy rate 77 percent (as per a study by BSA). In Bangladesh piracy is a deep rooted problem with almost 90 percent of software being pirated (as per a study by BSA).

"India and China are the world's fastest growing technology markets, however, the piracy levels in India are lower than China or Bangladesh. In fact, India saw its piracy rate fall by 5 points from 68 percent in 2008 to 63 percent in 2011. This clearly is the result of the effort by national and state government agencies to promote best practices in the management of software assets. If India were to take rapid action and review its software assets to ensure compliance, they should start using tools and services available in the market to help them determine and manage licensing position, including the software industry supported License Management Registry 360 (LMR360) - a free online portal which is the first and only registry that enables companies to better manage their software and connect with customers seeking legally sound entities. This could drive better business prospects and even a lead in exports to US over these nations," said Yolynd Lobo, Director - India, BSA|The Software Alliance.

If China and Bangladesh have to boost or at the least maintain their existing levels of exports to the US they must take up radical measures to eradicate piracy at every level and with immediate effect. It only goes to follow that if we were to comply rapidly -this enforcement will give us the opportunity to compete effectively against other developing economies and allow us to command a higher share of the global export pie. A disruption in the form of lack of compliance will clearly damage our chances.

Bottom Line
Taken together, it is clear that there is support at both the state and federal level to act upon those that undermine innovation and violate intellectual property rights by relying on stolen IT to operate their businesses.

India`s economy is now much more incorporated with the world markets as commodities business stands at 37 percent of her GDP (2010-2011). It is crucial that Indian businesses, however big or small, pay heed to the economic policies and the projected trends in world growth and the country as a whole be geared to take advantage of the growth potential in light of these emerging trends. It is critical that manufacturers start being vigilant about managing their IT assets and stay fully compliant. No pennies saved by using pirated software are worth the risk of losing access to the U.S. market or putting your company at a competitive disadvantage.