The Hindu Business Line : ESC wants withholding tax issue with Japan sorted out

THE Electronics and Computer Software Export Promotion Council (ESC) has called for a review of the `Avoidance of Double Taxation Agreement' between India and Japan to eliminate the 20 per cent withholding tax in Japan on the import of software and services from India.

"The withholding tax is creating hardships to software exporters to Japan. This issue has to be taken up with the Japanese authorities and a solution arrived at the earliest. Indian software products and solutions are marked up by 20 per cent in the Japanese market, which has considerably affected its market access as compared to the entry of similar products from countries like China," says the ESC Chairman, Mr P.K. Sandell.

Indian professionals and entrepreneurs, particularly from the small and medium enterprises (SMEs), Mr Sandell said, were facing difficulties in getting multiple-entry visa to visit Japan on business promotion tours. This had adversely affected their steady scouting of the market and building people-to-people contacts. Mr Sandell said that ESC recently held a brainstorming session with participants from all segments of IT - large, medium and small - to identify the problem areas and suggest measures for augmenting export of computer software to Japan.

One important suggestion that cropped up was that the commercial section of the Indian Embassy in Tokyo could identify, at the macro level, market trends in software demand and, at the micro level, market intelligence for feeding the Indian SMEs, which do not have presence in the Japanese market. ESC has been asked to act as a clearing-house for processing and circulating all inquires and interest of the Japanese trade and industry.

Mr Sandell said that to enable Indian software firms to overcome the cultural and language barrier, ESC has been implementing `Language-related market access facilitation initiative in the Japanese IT market'.

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