India Inc flays Obamas outsource-killer code

United States President Barack Obamas proposal to reform tax structure,scrapping incentives for American companies outsourcing services to other nations....

United States President Barack Obamas proposal to reform tax structure,scrapping incentives for American companies outsourcing services to other nations,has been lambasted as a protectionist move by Indian business chambers.

The impact of proposed tax reforms on India,which has become a hub for global IT companies,might be marginal,said the National Association of Software and Service Companies Nasscom. As far as India goes,global companies that earn profits here are subject to a tax rate of 33.9 per cent including surcharge and cess and the impact of the proposed reforms on them would be marginal. The tax reforms announced yesterday have only been proposed and there will be extended debate on them before they can be implemented,as it requires existing laws to be changed, it said in a written statement. The chamber is still evaluating the likely impact of the tax proposal.

Joining the chorus,another industry body Confederation of Indian Industry CII said that even though the move was expected,the developed world should not resort to protectionism in recessionary times as it might not help the recovery process. The US is going through a deep recession,and we understand the steps taken by them to rewrite their tax code. However,the CII does not want protectionism to be the order of the day, said secretary-general Chandrajit Banerji. In fact,an early economic recovery in the US would help both the nations,given that India was a net investor in the US,Banerjee added.

Meanwhile,Federation of Indian Chambers of Commerce and Industry Ficci termed the proposed move a retrograde step,forcing business concerns to take measures to restrict their economic activities in one region and not in the other. In any case,several US corporations have come and set up operations in India because of the several advantages our country has to offer. Our large and growing market,large pool of skilled manpower,reasonable labour costs make investing in India an attractive proposition. While this move would certainly have some impact on US investments abroad and into India,in the long run this would only run counter to the interest of US corporations desirous of cost-efficient operations across the globe, said Ficci president Harsh Pati Singhania.