New Export Rules Ease IT Work in India

Don't Trust Your Code to StrangersCIO Magazine, Sept 15th, 2003
OUTSOURCING TO India should become easier for U.S.-based companies thanks to
recent actions by the Department of Commerce to loosen export rules and to
inaugurate a U.S. and Indian government working group dedicated to improving
high-tech commerce between the two countries.

In June, the Commerce Department lifted some arcane and outdated export
restrictions, such as one that prevented U.S. citizens from bringing laptops
equipped with encryption overseas without its approval, and clarified other
provisions, such as protections against software piracy by foreign companies
that might modify and resell software from the United States. The United
States restricts high-tech exports that officials believe can be used to
build nuclear weapons.

The bigger development, however, was the July meeting of the U.S.-India
High-Technology Cooperation Group (HTCG), which President Bush and Indian
Prime Minister Atal Bihari Vajpayee agreed to form last November in response
to the rapid increase in IT outsourcing by U.S. companies. According to
Matthew Borman, deputy assistant secretary of commerce for export
administration, the United States wants India to reduce or eliminate tariffs
on high-tech products and to take other measures to facilitate Indian
imports of high-tech goods. India has asked the United States to review
restrictions on American exports and business dealings with certain Indian
government entities. (For more about how India is changing its laws to
support U.S. interests, see "India to Adopt Data Privacy Rules," Sept. 1,
2003.)

Meanwhile, the group plans to work closely with American and Indian
companies to identify next steps on the agenda. "The vast majority of IT
trade is not subject to restrictions," says Borman. "But we are looking to
identify barriers the government can deal with," while still limiting the
spread of equipment that can be used for weaponry.