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Don't stifle outsourcing, India tells America

US does not commit, but says more jobs need to be generated in both countries

Indivjal Dhasmana  |  New Delhi 

A day after was re-elected President of the United States, New Delhi impressed upon the US not to stifle outsourcing to India and the visa regime for the professionals. Washington did not give any such commitment, but laid focus on the importance of skills from India for the US economy.

Allaying fears that outsourcing cut jobs in the US, Commerce and Industry Minister said statistics prove that in the first few years, 280,000 jobs were outsourced from the bUS to India and 555,000 jobs were created in the US.

Sharma recalled that when Obama was in Mumbai in 2010, he had told that the US President that a report showed that for every job outsourced, two higher-value jobs were created in the parent company.

However, US Ambassador to India did not give any categorical commitment, though she said employment generation is an issue in both the US and India.

At a separate seminar at the WEF on India, Powell said outsourcing is one of the important components of the India-US economic relationships but not the sole focus.

“If you look at the exit polls to identify the issues that the people provided as the main reason for selecting one candidate over the other, it was economic policies, concerns about jobs in US,” she said.

She was responding to a query that the Indian media coverage on Obama reflected concerns of Indian IT firms, as there was a shrill pitch over outsourcing in the election campaign.

The US ambassador said the US people, however, also realise that the US is a global economic power and it needs global markets, resources that have been brought in by Indian entrepreneurs, engineers, innovators, etc.

This issue, she said, will emerge as a debate in the US continues over how to generate more jobs.

“The focus on job generation is also there in India. (We have to see) how we faclitate growth in both our countries to create additional jobs,” she added.

Rajat M Nag, Managing Director General, Asian Development Bank, said business decisions ultimately depends upon cost evaluation and quality work. Without going into the political part of outsourcing, he said fiscal sops, even if given to companies not going in for outsourcing, could be temporary shocks.

Sharma said greater movement of professionals is mutually rewarding and beneficial. “Accomplished professionals are important in today’s world, which is knowledge-driven,” Sharma said.

He said a large number of professionals from other countries are welcomed in India. “This is what a globalised economy is. If you are interdependent and inter-connected, you have to be large-hearted about the issue. You must encourage the movement of professionals,” he added.

Powell did not touch on the issue of visa problems of Indian IT professionals, but said both India and the US are encouraging the travel of Americans to India and Indians to America. She also laid focus on student visas.

When asked what the US wants India to do next in reforms after FDI in the retail space, Powell said implementation of FDI in multi-brand retail holds the key. Another reform that the US is keen on is a rise in the FDI cap in the insurance sector.

“The implementation of the ones which have been put forward is going to be very key, particularly the state governments’ response to FDI in multi-brand retail and individual companies’ response to that... Partnership with Indian companies is going to be very large,” she said.

The US ambassador also said, “We are looking particularly at expansion of FDI in insurance.”

A bill relating to raising of the cap from 26 per cent to 49 per cent in private insurance companies has already been cleared by the Cabinet and may come up in the winter session of Parliament. However, since Parliament's standing committee on finance recommended retaining of the cap, the bill might face resistance from the Opposition.

Powell said US companies are also eagerly watching government policies and the Supreme Court’s decision on the compulsory licensing of pharma products.

To a query over India-US relations in the next six months, she said since there are new faces in the foreign ministries of the two countries, there will be a review of relations, current dialogues and trade interactions to strengthen these ties.

Asked whether she would replicate the US delegation’s move to go to Gujarat and meet Chief Minister Narendra Modi, she said,”we do not go to poll-bound states.”

First Published: Fri, November 09 2012. 00:40 IST