No tax cuts for companies that outsource: Obama

NEW DELHI: Indian companies received a bad news from US President Barack Obama on Wednesday, when, in his first address to the Congress, he said

that there will be no tax breaks to companies that outsource jobs. This move, if pushed into legislation, will hurt India's BPO sector and if Obama lifts tax breaks, he will make it unattractive for US companies to outsource jobs to India. Industry bodies in India have said that the future poses big challenges for Indian IT companies after Obama's latest comment. Rajeev Chandrashekar, MP and President, FICCI said, "This poses yet another challenge for Indian IT and software companies that are growing in the US. In a way this is a natural exception of the US government trying to create a much more protectionist environment. This will pose a real challenge to Indian companies." Amit Mitra, Secretary General, FICC said that this is a matter of grave concern not only for India but for the US also. He said, "Perhaps what is wrong in this is, he may not have had the opportunity to read the literature of his own US Chamber of Commerce. When he does and if he does, he will know that he is really punishing American companies, not Indian companies only. Our sense is that this is something that has been in the offing. My feeling is that they are cutting their own nose to spite the phase." In his first speech to the joint session of Congress Obama had said, "In this budget, we will end education programs that don't work and end direct payments to large agribusinesses that don't need them. Well eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that were not paying for Cold War-era weapons systems we don't use."