3. OVERVIEW PHASE I - INDIAN IT SCENARIO PHASE II - JAPANESE IT PERSPECTIVE PHASE III - SOFTWARE AS EXPORTS PHASE IV - PROCEDURE FOR EXPORT PHASE V - ADVANTAGE INDIA
18. Penetrating the second biggest IT services market in the world continues to be a major challenge for the Indian IT companies.
19. Indian companies looking to de-risk themselves from dependence on the US/European markets market have long tried to establish themselves in this market.
20. Indian players have found nominal success. Only breakthrough being in the embedded systems space where they could work directly with the end customers
21. India, with its large technically qualified manpower base and IT service delivery expertise, has a big role to play as the aging Japanese economy makes choices to stay competitive in global markets.
33. Highly fragmented ERP products market. Top 3 vendors occupy only 40-50% of the market share.Most Japanese companies continue to operate legacy mainframe
34. KEY FINDINGS - WHO SERVES THE MARKET IN JAPAN? The Japanese IT Services Pyramid
42. DELIVERY Express Package Delivery: Packaged software is typically mailed and can be controlled by the package carriers who adhere to a system of ―clearing goods for import and export. International shipments absolutely require a commercial invoice and possibly an EEI (Electronic Export Information). Electronic Software Delivery: ―Shipping software via the Internet offers tax/tariff advantages and an immediate delivery. However, it is affected by the seller’s and buyer’s Internet capacity to send, receive, & use the software. An EEI is not required for "intangible exports of software and technology, such as downloaded software and technical data, including technology and software that requires an export license and mass market software exported electronically. For example, two types of intangible software products which are typically downloaded: Demo version Updates
43. TAXES AND TARIFF The specific country to which your buyer is importing the software will decide the tariff or value-added taxes involved. In order for Customs officials to assess duty correctly, the value of the medium should be indicated separately from the intellectual property on the commercial invoice. Generally, software valuation can be based on the value or cost of the carrier medium (usually a CD) rather than the intellectual property embedded on the medium. For example, software that includes sound, cinematic or video recordings, game software, etc., may be subject to a separate valuation policy. India breaks out entertainment software, healthcare software, and telecom software differently than standard software. If the buyer’s country’s tax rules treat the payments from the license as ―royalties and they subject royalties to a withholding tax, the foreign user will have to withhold (and pay to the foreign government) the percentage of the payment due under the license agreement. On the other hand, if the foreign country’s tax rules treat the software licensing payment as sales or regular business income, the payment typically will not be subject to a withholding tax. The U.S. company may owe income tax to the foreign country on the payment if the company has a ―permanent establishmentor is otherwise treated as engaging in business in the host country.
44. PROTECTING INTELLECTUAL PROPERTY Guarding against piracy is difficult. There may be some older references implying that software is not patentable, but consider the following: Invented software is protected if it meets other patentable criteria. If your software does something in the real world‖ which is not easily clarified, then you can patent how it does it. Operating systems for computers may or may not be patentable, i.e. mathematical algorithms or mental steps, but the ways data is compressed or transmitted have been patented. Copyright your software in the countries where it will do the most good. This is still the way to protect ―copying program code without mention of novelty or obviousness of the code. Have agreements with your partners to protect trade secrets. Naturally, you should avoid exposing the source code at all and there are ways to avoid providing it for your copyright. Source: Brown & Michaels Law See VEDP Fast Facts on ―Intellectual Property Rights‖.
45. RESTRICTIONS, REGULATIONS, AND COMPLIANCE Export controls are meant for national security, to support foreign policy, to protect against proliferation and short supply, and in some situations to carry out U.S. obligations internationally. The U.S. Departments of State, Treasury, and Commerce each have their own lists of denied parties and maintain independent systems of export controls. The intention of the federal government is not to hinder international trade, but to control sales of encryption products which may be used to subvert U.S. interests. Software export controls are determined by the strength of encryption which is measured by the key lengths of algorithms.
47. DECLARATION OF SOFTWARE EXPORTS Export of software is undertaken in physical form i.e. software prepared on magnetic tapes and paper media as well as in non-physical form i.e. direct transmission abroad through dedicated earth stations / satellite links. As far as export of software in physical form is concerned the procedure relating to declaration of shipments on GR/PP forms, handling of export documents authorised dealers and other allied matters is the same as applicable to export of other goods. Export of software, in non-physical form including Video/TV software and all other types of software products/packages, should be declared on SOFTEX form. Each set of SOFTEX form comprises three copies marked Original, Duplicate and Triplicate which carry an identical pre-printed serial number. All the three forms in each set should be completed and the entire set submitted for the purpose of valuation together with relevant documents to the officials of Department of Electronics (DOE), Government of India.
48. VALUATION OF SOFTWARE EXPORTS/CERTIFICATION OF SOFTEX FORM The valuation of export declared on SOFTEX form will be done by the designated official/s of the DOE at the Software Technology parks of India (STPI). The SOFTEX forms of the exporters located outside STPI as also forms in respect of export of Video/TV software shall also be certified by the designated official/s at the nearest STPI. DOE have made necessary arrangement for certification/valuation of the Video/TV Software declared on SOFTEX form with the Ministry of Information and Broadcasting, Government of India, once in a week at the STPI.
49. TIME LIMIT FOR REALISATION OF EXPORT VALUE The full value of the software exported as declared on the SOFTEX form or as certified by the official of Government of India at STPI, whichever is higher should be repatriated to India on due date of payment or within 180 days from the date of invoice, whichever is earlier in the manner prescribed in Rule 9 of the Foreign Exchange Regulation Rules,1974.
50. ELECTRONIC AND COMPUTER SOFTWAREEXPORT PROMOTION COUNCIL Electronics and Computer Software Export Promotion Council (ESC), sponsored by the Government of India is India’s largest Electronics and IT trade facilitation organization. How ESC Helps ? Acts as a link between the Government and its members and provides a platform for interaction on policy issues. Acts as a link between member companies and foreign companies in the business development process. Identifies prospective markets and buyers for specific products and services offered by members. Organizes promotional activities by way of participation in trade fairs and exhibitions, inviting foreign delegations, carrying on market surveys through delegations, sales and study teams and similar activities. Implements Government assisted programmes such as MDA and MAI.
75. Indian IT vendors are regarded high on technology & domain competence, with fast ramp-up capabilities, low on cost and with a better IP protection environment.
76. Japan and China also suffer with the historical mistrust amongst the nations. Most Japanese respect Indian culture and recognise the prowess of the Indian IT sector,