Indian manufacturing companies involved in exports to the US other than those in pharma, food and agro products may lose $10 billion worth of business annually if they fail to comply using genuine and legalised software over the next few months.
Given the slowdown and pressure from across the quarters, including from original software manufacturers, manufacturing companies and NGOs, some of the US states have recently enacted a law called ?Unfair Competition Act? to ensure that the US companies are given a level playing field as that of Indian and Chinese firms, which have together dominated the US markets over the decades through cost advantage by distribution of various products, ranging from engineering goods, textiles to jewellery capital goods among others.
?Nearly 70% of the total annual exports of about $45 billion to the US being commanded by the medium and small enterprises (MSMEs) in India. Within that exports worth $10 billion found be done with the usage of pirated or illegal software to take cost advantage against the US companies.
Following this, a section of original software innovators in the US and from other countries, including India, under the gamut of Business Software Alliance along with local NGOs and manufacturing firms, have been pressurising the US to bring in a legislation to counter the pirated softwares being used by Indian and Chinese manufacturers,? officials tracking the scenario said.
?The law was introduced in April and became effective from July. Washington and Louisiana are said to have enacted a law called ?Unfair Competition Law?, prohibiting products which are being manufactured and distributed using illegal software, despite being given a notice and opportunity to cure. The law further obligates retailers and third parties to undertake due-diligence to ensure IT compliance of their supply chain to ensure exports from companies from India and China using legalised/original/genuine software in their produce and distribution,? said Sunil K Singh, an attorney specialist in Intellectural Property Rights and a legal expert.
?It is serious to note that there another 39 states, too, are keen to introduce such laws to protect the business interests of US companies,? he said.
?It is high time that the Indian companies, particularly that of MSMEs, understand the importance of the US market and their business prospects through uninterrupted access to the US markets. It is also high time that the central government spearheads the awareness process among exporters, particularly to the US, to ensure they comply with US laws. Interestingly, a survey done by the US agencies found that nearly 64% of the exports (earlier it was 74%), worth $10 billion or more, are found to be done with illegal or pirated software as against 79% of Chinese companies. While India still needs to go a long way in bringing down usage of pirated software, positive things are starting appear with exporters switching over to original softwares,? Singh pointed out.
?Though Indian exports garner only a little over 2% of the total US imports of a little more than $800 billion annually from across the world, it is important for the exporters in India to sustain their growth momentum, otherwise they will lose their business to the US market,? said Rajveer Singh, managing director of ClusterKraft, a company involved in spearheading and providing consultancy services in this area.
?The biggest opportunity is against China, where software piracy and hardware counterfeiting is among the highest in the world. And since China is also the largest exporter of manufactured goods to the US, they will face maximum challenges, whereas Indian manufacturers can gain market share in the US by becoming IT compliant quickly and efficiently,? he said.
Indian companies and exporters can do self audit or seek professional help to undertake Software Asset Management review, he added.
