New Delhi: Warning Indian exporters against using illegal software, American Chamber of Commerce in India (AmCham India) on Sunday said failure to comply with the US Unfair Competition Act could lead to loss of access to the lucrative US markets.
Some states in the US have a legislation under which companies are not allowed to sell products manufactured using stolen or misappropriated IT as it is deemed to be engaging in unfair competition.
"The US law against 'unfair competition' aims to combat unfair trade practices in manufacturing by preventing usage of illegal or stolen IT (hardware and software), which in turn provides an unfair economic advantage in the market place," AmCham India Chairman Ajay Singha said.
The statement comes in the wake of a lawsuit filed by California Attorney General Kamala D Harris against an Indian apparel company -- Pratibha Syntex and another Chinese firm.
The lawsuit alleged that not all licences procured in these companies are legal and genuine, including products manufactured by Adobe, Microsoft, Symantec and others.
The complaint alleged that foreign apparel manufacturers, who have not paid software licensing fees, have a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales.
"Starting with global restrictions against child labour and global environment movement, governments across the world are taking a stricter view of compliance in global trade. Indian companies need to comply with these norms to ensure they have access to the lucrative US market," he said.
Singha added that failure to comply would translate into a significant negative impact on business and the companies' bottom line.
The US is the one of largest exports market for Indian manufacturers with goods exports in 2011-12 totalling about USD 35 billion.
India exports items like precious stones, pharmaceutical products, apparel and engineering goods to the Western nation.
"For many manufacturers in India, risking loss of trade with the US is simply not an option. Taking an ill-sighted shortcut of using illegal software is no longer worth the risk of loss of business," he said.
Singha said since the levels of piracy in India are lower than those of competing markets like China, it would be easier for Indian companies to comply with these rules.
According to the Business Software Alliance, India had a piracy rate of 63 percent (USD 2.93 billion) compared to 77 percent in case of China (USD 8.90 billion) in 2011.
In the same year, global IT theft exceeded USD 63 billion, which hurt economic growth, job growth, investment and incentives for innovation.
"But regardless of whether unfair competition laws have been passed in locations where a country exports goods, the fact remains that using stolen IT links companies directly to illegal economic activity and unfair profit," Singha said.