USUnfairCompetitionLawanopportunityforIndianmanufacturers

USA has traditionally been a prominent market for India, the exports to US has increased
significantlyfrom$ 5014.48millionin1995to$ 19493million bytheend of2010.Many sectors
haveseenaconsiderablehikeinthegrowthrateinexportstoUSincludinghandicrafts,gemsand
jewellery,processedfood,pharmaceuticals,organicchemicalsetc.Indianexportshavebeenlosing
out its share inUSimportsduetoprevalence ofregionaltradeagreements(RTAs)&preferential
tradingagreements(PTAs)betweenUSAandcompetingsuppliers.
DoesIThavearoletoplay?
IT has been identified as one of the key differentiators enhancing the global competitiveness by
facilitatingalmosteachandeverybusinessprocessesacrossalldepartments.ITusageisthesecond
largest contributor towards increasing operating profits and other performance indicators in the
manufacturing sector. (Source IDC waiting to connect 2008). The use of IT in India is still low
(NASSCOMsurvey)comparedtootherdevelopingeconomiessuchasChina,JapanandotherSouth
EastAsiancountrieswhichinturnleadstobetterpricing.
UnderstandingtheUnfairCompetitionLaw
The new Unfair Competition Act (UCA) Law states thatA business that manufactures aproduct
whileusingstolenormisappropriatedinformationtechnology(stolenIT)initsbusinessoperations
engagesinunfaircompetitionwhentheproductissoldinWashington,eitherseparatelyorasa
componentofanotherproduct,incompetitionwiththeproductmadewithoutuseofstolenIT.
ThelawalsoimpliesthattheUSCompanysellingwithintheStateofWashingtonisresponsiblefor
thesupplierswhomaybelocatedanywhereintheworld.Itappliestoallmanufacturedproducts
andtoallsuppliersfromanycountry,andallowstheGovernmenttoblocktheUSCompanyfrom
selling the finished product in the State and compel them to pay damages for what either the
Companythemselvesortheiroverseassupplier(s)did.
IsthereanopportunityforIndianmanufacturingsector?
Veryclearly, USCompanieswillincreasinglypreferto engagesuppliers whouse legitimateITand
tradewithcountrieswherepiracyisminimum.CountrieslikeChinaandBangladeshhavealeadover
IndiainexportstoUS,however,thesecountriesarehometorampantpiracy.Chinasillegalsoftware
marketwasworthnearly$9billionin2011versusalegalmarketoflessthan$3billion,makingits
piracyrate77percent(BSA).BangladeshontheotherhandranksthefirstintheAPACregionand
thesecondhighestintheworldforuseofIllegalITwithalmost90percentofsoftwarebeingpirated
(BSA). The piracy rates in India are much lowers compared to these countries. If China and
Bangladesh have to maintain their existing levels of exports to the US they must take up radical
measurestoeradicatepiracyateverylevel.
Thisenforcementwillgiveustheopportunitytoandcementtheirpositionaspreferredsuppliers
simplybyusinggenuineITandallowustocommandahighershareoftheglobalexportpie. Also,
consideringthatthetotalcostofswitchingtogenuineITisamere1%ofthetotalcosttoanSME
uniteventhesmallerplayerscannowcompeteataglobalscaleagainstlargerplayersincompeting
markets.Adisruptionintheformoflackofcompliancewillclearlydamageourchances.