Charges fly as India-US outsourcing row deepens

Tuesday, 17 February 2004, 08:00 Hrs
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NEW DELHI: The India-US row over outsourcing deepened Monday with Washington accusing the Asian economic major of not shedding its protectionist attitude and New Delhi charging it with adopting double standards on free trade.

US Trade Representative Robert Zoellick said India must reduce trade barriers for other countries at a faster pace to minimise the growing backlash against outsourcing of jobs by developed economies.

The Indian government, on the other hand, maintains it would be difficult for Asia's third largest economy to open up some of its industrial sectors in the wake of the US ban on shipping of government contract overseas.

"It (outsourcing) is a two-way street. India has been very reluctant in opening up," Zoellick, who is on a day's visit to India as part of his multi-nation tour to promote free trade negotiations, told a press conference here.

"We want to keep our market open but we need to make it a two-way street. There is anxiety in the US on outsourcing. We have to see how we can create additional jobs on both sides."

Zoellick said if India opened up its services and agriculture sectors at a faster pace it would help the US administration to minimise the outcry over large-scale job losses in the country.

Referring to the recent US decision to ban outsourcing of government contracts overseas, the US official said people were worried about the impact of shipping of jobs by American companies to other countries.

"Although the decision concerns a very small part of the federal government contracts, It reflects the sensitivity of the issue. Our view is trade should be a win-win situation for all," he added.

In a major blow to India's booming outsourcing industry, the US Senate last month passed a bill banning American companies from shipping government contracts to low cost destinations like India.

India's vast pool of an English-speaking work force, 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 India into electronic housekeeper to the world, taking care of a host of routine activities for multinational giants.

According to a recent study, the growing backlash in the West over shipping back-office jobs overseas may adversely affect the growth in India's money-spinning outsourcing industry.

The study projected that two million jobs from the top 100 global financial institutions would be moved to India by 2008. Of these, 851,000 jobs would be from the US.

Meanwhile, the Indian government conveyed its dismay to the US over ban on outsourcing with Commerce Minister Arun Jaitley saying the restriction is against the global free trade norms.

"It is strange that on the one hand, people are talking about the opening of markets, and on the other hand, banning business process outsourcing," said Jaitley after an hour-long meeting with Zoellick earlier Monday.

Source: IANS
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