Chemical Industry Needs IT Compliance to Export to the USA Market

The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP. India ranks 12th by volume in the world production of chemicals. Indian chemical industry is expected to grow to US$100 billion by 2015.

The export performance of chemical sector is many impacted many factors especially the compliance related issues. With the recent developments for Indian manufacturing exporters, there is an opportunity to increase exports to the US. With the fluctuating and competitive global market it is necessary that the other factors impacting the global demand should be kept in mind. To seize this opportunity and encourage companies to make sure they are in compliance with the Unfair Competition Act (UCA)

A business that manufactures a product while using stolen or misappropriated information technology (stolen IT) in its business operations engages in unfair competition when the product is sold in the states of USA, either separately or as a component of another product. Using information technology in business operations means using IT to design, manufacture, distribution, marketing, or sales of products.

Implications of Unfair Competition Act for Chemical Sector

Although UCA has only been adopted in two states, it is being discussed in some other states in the United States such as Massachusetts, Kentucky, New York, Connecticut, Arizona, Illinois and Oregon. In addition, based on this Act, IT owners in the United States will soon carry out their investigation and send notice to enterprises allegedly using illegal IT, including Indian enterprises.

Many Indian enterprises are currently using illegal IT, especially computer software. When being sued, Indian enterprises will face with the danger of having to pay damages for competitors and attorney's fee for litigations. In addition, the products of these enterprises may be banned from being sold in USA. Not abiding by IP laws makes the competitiveness of many Indian enterprises worse than their counterparts in the region. According to the provisions of UCA, India enterprises can even be sued by the regional competitions in the US courts.

Therefore, the compliance of UCA to India enterprises is urgent and necessary to ensure that they do not face losses when exporting their products to the US market. In their mandates, the state authorities should take specific actions to help India enterprises understand basic requirements of UCA and improve their awareness of the necessity to comply with the IP laws.

The act may particularly may favour India in terms of manufacturing exports to USA if the compliance levels are adhered fast To facilitate the whole process. There is strong possibility for Indian exporters to not only comply to the regulation but also do it fast in comparison to China ( Where piracy is a more serious issue) to capture the large size of the cake.

How to Comply

Internal Review: Manufacturers should ensure that they have obtained appropriate licenses for any IT used in the course of their business, in particular software products since they are licensed. Further, they can implement basic Software Asset Management (SAM) guidelines and regularly audit their organization's use of software assets. Ongoing SAM processes can ensure license compliance, reduction in costs, cyber security, protection from legal and reputational risks and increase in information technology and end-user efficiencies

Compliance Certificate: Organizations can also approach various software publishers to conduct a license audit and receive a compliance certificate, upon closure of license gaps. Major software publishers have internal compliance teams that partner with trained third-parties to conduct third party SAM Reviews

CSS (O) Certification: The Business Software Alliance (BSA), a non-profit association of software publishers has launched the CSS(O) - 'Certified in Standards Based SAM for Organizations' certification, which certifies an organization's internal SAM processes vis-a-vis the ISO 19771 SAM standard. Organizations can undergo this audit through BSA and receive the certification, which is valid for two years.

Verafirm Registry (Licensed Management Registry 360 (LMR360)) : This is an online software license management registry created by BSA. It allows companies to log their software inventory and compare it against their license rights. It is a self-guided, self-declaration portal for companies to maintain, monitor and demonstrate their software usage. International buyers look at the registry to identify compliant sellers.

About The Author

Mr. RAJVEER SINGH is an economist and management professional with specialization in local industrial development, sub-sector-cluster based industrial development, and local economic policy. Awarded M.Phil in Industrial Economics from the JNU, New Delhi, India. Mr.Rajveer Singh has served national-international organizations and developmental institutions. He has worked as a key team member in the cluster development program of UNIDO and has been appointed as International expert on cluster based industrial development for Cambodia in 2005.

His 25 years of work experience includes positions including Managing Director, Apex Cluster Development Services Pvt. Ltd., United Nations Industrial Development Organization (UNIDO), Federation of Indian Chamber of Commerce and Industry (FICCI) and as Economic Officer, Punjab National Bank (PNB), New Delhi.