Obama against tax breaks to firms shipping jobs overseas

 President Barack Obama has made it clear that his administration is against tax breaks to the US companies shipping jobs abroad and said incentives will be given to those firms which create employment in the country, a move that may have ramifications for the Indian IT sector.

"Let's stop giving tax breaks to companies that are shipping jobs overseas. Let's stop incentivising that and let's give tax breaks to companies that are investing right here in the United States of America," Obama said in response to a question at a White House news conference last evening.

His remarks came close on the heels of the Ohio state Governor passing an executive order to ban outsourcing, a development that has raised concerns in India which is often described as the world's back office.

Obama said instead of tax breaks that encourage corporations to create jobs overseas, he was for tax breaks for companies that create jobs in the country.

"... We believe in tax breaks for companies that create jobs right here in the United States of America. And so we've begun to do that," Obama said.

"We believe in investments that will make America more competitive in the global economy -- investments in education and clean energy, in research and technology -- and we're making those investments," he said.

The Indian IT sector, which gets 60 per cent of its export revenue from the US, has come out strongly against US moves to ban outsourcing.

New Delhi's concerns on outsourcing and the steep hike in H-1B and L1 visa fees is expected to be raised during Obama's maiden visit to India in November.

This is the second time in a week that Obama has spoken about outsourcing.

Obama admitted that economic progress in the US, facing a two-year-long recession, has been "painfully slow" and "we are not there yet".

"For all the progress we've made, we're not there yet. And that means people are frustrated...," Obama said.

Obama, under fire over the issue of job losses, said his proposals are meant to accelerate job growth in short term and revive small businesses.

"Because even though the economy is growing again, and we've added more than 750,000 private-sector jobs this year, the hole the recession left was huge, and progress has been painfully slow," he said

He said millions of Americans are still looking for work and these proposals are meant to both accelerate job growth in the short term and strengthen economy in the long run. These proposals include a more generous permanent extension of the tax credit that goes to companies for all the research and innovation that they do in the US.