India should open up to minimise backlash: US

Monday, 09 February 2004, 20:30 IST
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NEW DELHI: India needs to lower trade barriers at a faster pace to minimise growing protests to outsourcing of back office services from developed economies, a senior US official hinted Thursday. "International trade is a two-way street. There is a view in the US that some countries are not as open as the American economy is," said David Gross, US International Coordinator for Information and Communications Policy. "There is much to be gained by freeing international trade. We look forward to meeting with our colleagues not only in India but also in other countries to focus on the importance of opening up markets," Gross told a news conference here. On the recent decision of the US senate to ban outsourcing of government contracts to other countries, Gross said the move would not have a significant impact on Indian companies as the restriction was limited to few sectors. "It is very important to understand what it (the ban) signals. Jobs in the US is a very sensitive issue as it is anywhere else," he noted. In a major blow to India's booming outsourcing industry, the US Senate Thursday passed a bill banning US companies from shipping government contracts overseas. The bill, prohibiting private American companies from shifting tech jobs abroad, was part of the $820 billion spending bill leftover from last year. The bill has become the first federal law that limits companies from performing contracted work outside the US since outsourcing became a potent political force a year ago. India's vast pool of English-speaking manpower, coupled with its educational system and training programmes, have helped transform the country into a global outsourcing superpower. The rapidly growing IT industry has virtually turned the country into an electronic housekeeper to the world, taking care of a host of routine activities for multinational giants. India's IT market has grown from $1.73 billion in 1994-95 to $16.5 billion in 2002-03, accounting for three percent of gross domestic product last year. But as global recession tightens its grip and job losses in many economies become a norm, India's cost-effective software army is increasingly becoming the envy of foreign lands. Michael Gallagher, US acting assistant secretary of commerce, said: "We as a country resist barriers to free trade. But a case needs to be made over and over again about the two-way nature of trade." Lauding the rapid strides taken by India in the IT and communications sectors, Gross felt the Indian government must raise the cap on foreign investment in the telecom sector to boost growth. "Telecom is a very capital intensive business. It is important for companies to draw capital from whatever source possible to face competition," he said. "Indian economy is not allowed to benefit by restricting the potential flow of money." Gross said increased foreign investment in the Indian telecom sector would lower costs for consumers and improve the quality of service.
Source: IANS
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