Protectionist policies not acceptable: FM to tell US

Finance Minister Pranab Mukherjee, who is currently on a a US visit, plans to express his disapproval of 'protectionist policies' to top government officials including Secretary of State Hillary Clinton.

"Protectionist policies are not acceptable," Mukherjee told PTI after landing in New York on Wednesday where he stopped for a day to address the India Investment Forum.

The minister will take up the issue with officials in Washington after a spate of policy decisions in the US, which India thinks will impact its IT outsourcing industry.

Last month Ohio had banned outsourcing of state IT contracts to foreign companies. This was preceded by Washington's decision to hike visa fee for H-1B and L1 categories. The US policy decisions are expected to hurt the $50-billion Indian IT market, which garners a major chunk of revenues from  American companies.

Mukherjee's visit comes after a bilateral meeting between Foreign Minister S M Krishna and Secretary of State Hillary Clinton last month, where India voiced its concerns about the visa fee hike, export controls and ban on government outsourcing.

"We shall have to keep in view that if the world economy is to come out of the present crisis then protectionism is not the answer," Mukherjee said.

Noting that the US protectionist policies could impact India’s software companies, the minister said that the financial crisis would ease if "uninterrupted flow of goods and services and capital are allowed to take place".

Mukherjee stressed that India would be speaking out against protectionism at the meeting of the Finance ministers of G20 countries in South Korea, later this month.

Pointing out the already existing trade gap between imports and exports in India, Mukherjee stressed that “if there be no robust demand for exports from the developed countries then are exports may suffer...It may affect our trade balance in the course of time.”

On whether the financial crisis in India was over, Mukherjee said he had withdrawn some of the stimulus package, but it was still too early to say that the country was out of the woods.

"After watching the status of growth in the second quarter and third quarter I will be in a position stay whether we are total out of it or not," he said.