The Hindu Business Line : Indo-Japan group to leverage IT strengths

The Minister for Communications and Information Technology, Mr Dayanidhi Maran, with the Japanese Minister of State in charge of Information Technology of Japan, Mr Toshimitsu Motegi, in the Capital on Thursday. — Kamal Narang

New Delhi , Aug. 19

THE Minister for Communications and Information Technology, Mr Dayanidhi Maran, today met a Japanese delegation led by Mr Toshimitsu Motegi, Minister of State in-charge of Information Technology, to discuss ways to leverage each other strengths in the area of IT.

The two sides also discussed the issue of the withholding tax Japan imposes on subsidiaries of Indian software companies, creating a non-level playing field. "Taxation issues are a mutual problem. But it is clear that Japan is looking at us differently. They see our software potential and capabilities. We are trying to use their hardware expertise," Mr Maran told reporters after a short meeting with his Japanese counterpart.

Mr Maran said that the two countries would be setting up a working group to find ways to leverage each other's IT strengths. "The officials will meet in the next couple of weeks and we will work out the modalities," he said.

India has been demanding that Japan waive the 20 per cent withholding tax imposed on Indian companies with subsidiaries in Japan. Currently, India exempts software developers from any tax liability. Due to imposition of such tax, the software cost increases by approximately 25 per cent

Mr Motegi praised the rapid strides India has made in the field of information and technology and showed keen interest in increasing bilateral cooperation, a press statement said. Reciprocating the sentiments, Mr Maran stressed the need for strengthening bilateral cooperation by integrating both countries' strengths in the fields of hardware and software. He also spoke about the opportunities for Indian IT products in Japanese markets.

The IT services market in Japan is estimated at $ 60 billion per year. Out of this, approximately $ 3 billion is outsourced. Out of this $ 3 billion, Indian IT companies have a market of $ 190 million per year. The progress of Indian IT companies has been slow, even though 70 Indian IT companies have established themselves in Japan. The Japanese market currently accounts for about 3 per cent of Indian global IT services exports.