Software piracy decrease to boost Indian IT sector

By SiliconIndia   |   Thursday, 24 April 2003, 07:00 Hrs
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Increased copyright protection for software could accelerate the growth of the Indian economy by creating new jobs, business opportunities, and increase in tax revenues, according to a recent IDC study.

BANGALORE: The study, "Expanding Global Economies: The Benefits of Reducing Software Piracy," assesses the impact that the information technology industry has in 57 countries around the world, including 14 in Asia.

According to the study, if the software piracy rate in India reduces from 70 percent to 60 percent by 2006, it would create 50,000 new high tech high wage jobs for the workforce – more than two and a half times the number now available in the domestically focused portion of India’s software Industry. It could also add $2.1 billion to India’s economy and increase local industry revenues by more than $1.6 billion. It could also generate an additional $ 92 million in tax revenues.

"This report reveals not only how significant the software sector has been for economic growth in India, but how it will continue to be the engine in powering the Indian economy forward. As the software industry is growing more rapidly than traditional industries, it will become a prominent driver of economic growth," said Jeffrey Hardee, Vice President and Regional Director, Asia Pacific, Business Software Alliance.

"Protection and enforcement of intellectual property rights encourages entrepreneurs to develop innovative products that make businesses operate more efficiently and our lives run more smoothly. Entrepreneurs can build their ideas into businesses and the growth of entrepreneurial business creates more jobs for the local workforce. This in turn drives spending in the economy and maximizes its growth potential. Increased tax revenues are generated, which are then used to fund important public works. In short, everyone benefits," Mr Hardee, added.

India is projected to have the fastest growing IT sector in the Asia-Pacific region, moving it up from the region’s sixth largest IT sector to its fifth largest by 2006. By further reducing its software piracy rate, India could accelerate the potential even further – growing 167 per cent instead of 148 per cent between now and 2006.

"For the 57 countries studied, we found that the economic impact of even a slight reduction in the amount of pirated software can be dramatic. Therefore, the benefits of lowering software piracy can be substantial to the local economy," said Kapil Dev Singh, Country Manager, IDC India. "More importantly, local industry would gain more than the multinational importers, mostly because so many of the benefits would accrue to local services and channels firms, and because local software firms, which cannot spread their risk across geographies with lower piracy rates, would have the wherewithal to reinvest in their businesses," he added further.

The study also showed that Asian Countries benefit most from piracy reductions. In Asia, nearly 54 percent of software programs were pirated. Reducing the rate 10 points to 44 percent by 2006 could create 1.1 million new jobs, increase economic growth by $US170 billion, and generate another $US15 billion in tax revenues. "Strong intellectual; property protection is vital for innovation and economic growth in the information age," Hardee said.

In addition to detailing the solid economic benefits of reducing software piracy around the globe, the IDC report lays out a framework for reducing piracy rates. Specifically, the report outlines steps and policy changes governments can take to strengthen and better enforce intellectual property protection laws. It also encourages governments to lead by example and to embrace programs to educate consumers about their responsibilities, and the harm piracy causes innovators, copyright owners, and the economy.

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