US senate law on outsourcing unwarranted: CII
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US senate law on outsourcing unwarranted: CII

Monday, 26 January 2004, 08:00 Hrs
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NEW DELHI: Premier business lobby group Confederation of Indian Industry (CII) Saturday termed as unfortunate and unwarranted the US Senate's decision to ban outsourcing government contracts overseas.

"India and the US have been steadily deepening their economic and strategic ties. Therefore, the passage of this law will be a speed-breaker on the road to closer ties," said CII president Anand Mahindra.

"This is particularly unfortunate, since studies on the BPO (business process outsourcing) sector have shown that the company that outsources gains much more than the company to which it is outsourcing," he said in a statement here.

"Although, normally such provisions are not changed, perhaps US President George W. Bush would reconsider this before signing the bill."

In a major blow to India's booming outsourcing industry, the US Senate Thursday night 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, clearing it for President George Bush's signature.

After the presidential approval, the bill is likely to 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 is taking examples from the US and other developed countries on its path of liberalisation and reforms," said Mahindra.

"However, such anti-liberalisation measures, when adopted by developed countries, and particularly by the US, which target developing countries will lead to greater protectionism in other sectors, thus impacting global trade flows," he said.

Mahindra said domestic American politics might have resulted in the passage of the law although it was possible to continue liberalisation even as elections were imminent.

"In this particular case, since the Senate ban is on US government contracts, the ultimate loser is the US taxpayer, who will now pay more for government services."

Source: IANS
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