Govt to protest 'protectionism'

The Ohio ban on offshore outsourcing sparked strong reactions here on Thursday, prompting India to voice its protest against US "protectionism" for the second time in a month. Jayanth Jacob reports.

The Ohio ban on offshore outsourcing sparked strong reactions here on Thursday, prompting India to voice its protest against US "protectionism" for the second time in a month.

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The move, though ridden with America's domestic compulsions with impending elections to the US Congress, has a direct bearing on India's IT sector and has New Delhi concerned.

India had been disappointed about the US not conceding to its concerns over a legislation that raised fees for the two visa categories — H1B and L1 — that IT companies use to send workers to that country for project work. Indian companies are expected to incur an additional annual expense of $200 million for this.

Government sources said they would again take up these matters with the US "as economic relations are a major component in the strategic relationship between the two countries, and Indian IT companies play an important role in it, including making considerable investments in the US".

On the Ohio ban, NASSCOM said it was "counter-productive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens".

Government sources said such decisions amount to "protectionism".

"We have to address this irritant and will be taking up the issue with the US. Our IT companies have substantial investment in the US," a government source pointed out.

Obama on tax breaks
President Barack Obama has said that tax breaks should go to companies that create jobs in the US and not overseas.

"For years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries," Obama, who is slated to visit India in November, said.