As US President Barack Obama vowed to eliminate tax benefits for American firms shipping jobs to foreign countries,India has said it is against any protectionist move as it would affect its IT industry.
“The IT industry will be affected due to the impact of financial meltdown…substantial number of Indian workers are there we will have to address this issue…we are opposing protectionism,not only here but at every forum,” Finance Minister Pranab Mukherjee told Karan Thapar in an interview for Devil’s Advocate programme.
“We can’t just go for country specific solution for such problem…issue is that our IT industry will be affected,” he said.
Mukherjee added that the protectionism of any kind at this time should be avoided and Prime Minister Manmohan Singh also made it quite clear at G-20 meeting last year.
On February 26,Obama in his maiden budget speech said the US government would do away with tax breaks for firms outsourcing jobs to overseas destinations,including India. At the same time,the administration would be providing tax relief to 95 per cent of American working families.
Nearly 1,000 US firms,which have shipped their jobs overseas,are expected to be affected with the proposed elimination of tax incentives. The plan mainly refers to one of the provisions in the tax code that allows companies to pay less taxes for profits earned from foreign shores.
However,the US is yet to outline the ways to abolish tax breaks for the entities outsourcing jobs. Majority of the Democrats are against the provision,saying the same was encouraging firms to move jobs overseas and even cut the local positions.