Japan's interest in Indian IT sector

NEW DELHI, MAY 5. India and Japan today agreed to initiate a ``dialogue on information technology'' with the aim of stepping up bilateral trade in software to $500 million by 2002.

The Japanese Minister of International Trade and Industry, Mr. T. Fukaya, who met the Minister for Information Technology, Mr. Pramod Mahajan, here expressed his country's interest in strengthening closer economic ties, particularly in the area of electronic commerce, electronic governance and promotion and facilitation of business to business co-operation in the IT sector, an official statement said.

The ministers also agreed to formulate a "Japan-India IT business exchange programme" to promote and support infotech business, the statement said adding that the specific details and modalities of the programme would be worked out during the forthcoming dialogue.

In addition, Japan has also proposed to explore investment opportunities for setting up chip making fabrication plants in India, it said.

The Japanese venture capital industry has also shown keen interest in investing in Indian start-ups, the release added.

India's software exports to Japan stood at $50 million in 1999- 2000 and hence the dialogue is expected to offer immense scope for further increasing the Indian software exports to the country.

India has also welcomed the Japanese offer to conduct a training programme on business practices for the Indian IT industry, details of which are expected to be chalked out during the dialogue.

Outlining various issues restricting the Indian software industry from fully benefiting from the $15 billion software market in Japan, it said a withholding tax of 20 per cent was levied by the Japanese government on Indian software services as "fees for technical services".

"The Ministry of Finance and the Ministry of Information Technology have taken up the issue of double taxation under the double taxation avoidance convention signed between the two countries," it said adding that the issue was likely to resolved soon.

- PTI

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