US doing no favour by outsourcing jobs: Nath

New Delhi: The Government on Thursday reacted strongly to US President Barack Obama's statements and US policies to protect American jobs. Union Minister of Road Transport and Highways Kamal Nath said that outsourcing was an economic reality.

"US is not doing any favour by outsourcing work. This is an economic issue," said Nath after Obama on Wednesday announced tax cuts only for companies which create jobs in the US.

Nath was supported by Union Commerce and Industry Minister Anand Sharma who said that India would raise the issue with the US government and convey its disappointment over the ban imposed by Ohio on offshore outsourcing at the high-level bilateral Trade Policy Forum (TPF) meeting in Washington later in September.

"It will be on the agenda. I will raise the issue at the TPF meeting there definitely," Sharma said.

Sharma and US Trade Representative Ron Kirk will co-chair the September 21 meeting of the TPF,which is the principal trade dialogue between the United States and India.

But the Indian IT Industry is worried over America's stand on outsourcing. The state of Ohio has already banned outsourcing work by government departments, which only affects Wipro in India at the moment.

Infosys Technologies' HR head Mohandas Pai said that Prime Minster Manmohan Singh must be strong in raising the issue with Obama when he visits India in November.

"Obama is coming to India. We want the Prime Minister to stand up and tell Obama very clearly that open trade is the way to go because we are told that when Obama comes to India is going to offer $ 10 billion of nuclear business to American companies. India is a very buyer today of defence goods so we have a leverage and we must use this leverage. If we keep quite and act weak they are going to ride roughshod over our head," said Pai.

However, Confederation of Indian Industries National Council member Ganesh Natarajan dismissed Obama's announcement as not a big deal.

"It (tax breaks for US companies) will encourage both multinational as well as Indian companies to do research and innovation. The tax break he is talking about is something different. I think they are discouraging movement of jobs overseas but this new announcement just reiterates the fact that if there is innovation, there is new job creation, it will give benefit. I think we should take advantage of it, not everything is negative," said Natarajan.

Obama had on Wednesday, on a mid-term campaign in Ohio, vowed to end Bush era tax cuts encouraging companies to "create jobs and profits in other countries".

"For years, our tax code has given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries. I want to change that. I am proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America," said the US President.

Meanwhile, US State Department spokesman PJ Crowley said the two countries may have differences even as they forge a strategic partnership, but they have an effective dialogue to resolve them

"We do have an ongoing strategic dialogue with India. We do believe earnestly that the world's oldest democracy and the world's largest democracy have a great deal in common. And in fact, India can be, as the Secretary said in her remarks today, developing new partners who are able to assume greater responsibility for critical issues in the future. Certainly, from a bilateral standpoint, we will have issues that crop up from time to time," said Crowley.

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