Congress warns US outsourcing tax bill HIRE could hit Indian economy

The Congress on Tuesday said a bill introduced in the US Senate proposing a 25 per cent tax on any American person making an outsourcing payment will "light a fire in the Indian economy" if it becomes a reality.

The opposition party said the bill reflects a growing mindset in the US that while blue-collar jobs were "lost" to China, white-collar jobs should not be "lost to India."  Congress general secretary in-charge communications Jairam Ramesh made the remarks, referring to the Halting International Relocation of Employment Act, or HIRE Act Bill, introduced on October 6 by Senator Bernie Moreno of Ohio.

The bill has been referred to the Senate Committee on Finance, he said on X.

The bill proposes a 25 per cent tax on any US person making an outsourcing payment, defined as "any money paid by a US company or taxpayer to a foreign person whose work benefits consumers in the United States," he said.

The bill has a direct and deep impact on India's IT services, BPO, consulting and GCCs (global capability centres), Ramesh said.

Other countries like Ireland, Israel, and the Philippines too will be impacted but the maximum effect will be on India's exports of services which has been a marked success story over the past quarter of a century, he said.

Ramesh said the bill in its present form may or may not pass, and may get modified.

"It may just linger. But one thing is clear - the Bill reflects a growing mindset in the US that while blue-collar jobs were 'lost' to China, white-collar jobs should not be 'lost to India'," he claimed.

Nobody expected a year ago that the India-US economic relationship would take so many knocks - of which the HIRE Bill is another reflection, Ramesh said.

"If ever HIRE becomes a reality it will light a fire in the Indian economy which may have to face a new normal in relation to the US," the Congress leader said.

The proposed HIRE Act, introduced by Senator Bernie Moreno, if passed, will curb outsourcing and promote domestic employment by imposing a 25 per cent levy on payments made by American companies to foreign workers for services benefiting US consumers.

Ramesh also shared a link to the provisions of the bill.