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Anti-outsourcing bill blocked in US Senate; India Inc happy

Posted on 30 September 2010,    
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Anti-outsourcing bill blocked in US Senate; India Inc happy


In a relief to the Indian IT industry, the Republicans in the US Senate blocked an anti-outsourcing bill that would have deterred American firms from shifting jobs to competitive locations overseas. 


Seen as a blow to President Barack Obama, the 53-45 defeat vote blocked the bill on Tuesday, as it fell six votes short of passage.



At least 60 votes were needed to clear the Republican procedural hurdle to the Democrat bill.



The bill proposed a ban on government contractors from using American taxpayers' money to move jobs offshore.



A relieved India Inc that lobbied hard against anti-outsourcing campaign in the US, hailed Republicans for blocking the bill that denied tax breaks to US companies moving jobs offshore.



The setback to anti-outsourcing campaign, propelled among others by Obama himself, comes a week after a Nasscom delegation comprising representatives of top IT companies such as Infosys, Wipro and TCS visited the US and lobbied with the key Congressmen and American corporations.



"We welcome the move. The anti-off-shoring bill was more of an electoral rhetoric. We had met the Congressmen, key Government officials and American industry last week and expressed our concerns against the protectionist measures," Nasscom Vice-President Ameet Nivsarkar said in New Delhi on Wednesday.



FICCI Secretary General Amit Mitra said, "We believe that the majority of US Senate has kept in mind the larger interest of the US economy, its corporations and global economy".



As part of efforts to boost employment in the US, Obama is vigorously pushing to end the tax break for companies who ship jobs overseas saying it should go to firms who create jobs in America.



India, which already holds at least 50 percent of the global outsourcing market, has become the world's back office as Western firms set up call centres, number-crunching and software development outlets to cut costs.



Democratic backers, who vow to make the vote a campaign issue in the 2nd November Congressional election, claimed that Republicans have undermined their efforts to create jobs.



On the other hand, Republicans and business groups dismissed the bill as a political stunt that would increase taxes on companies and undermine job growth.



In what was seen as an electoral populist move of the Democrats, the Creating American Jobs and End Offshoring Act aims at small manufacturers and included a payroll tax exemption for firms that encourage jobs to US.



But it also contains provisions to prevent businesses from deferring US taxes on the income they make from foreign subsidiaries.



Several business groups such as the National Association of Manufacturers (NAM) were strongly opposed to the anti-outsourcing legislation.



It had sent a letter to senators, arguing the measure would make US corporations less competitive and hurt job creation.



Terming the bill as an election gimmick, Republican senator Orrin Hatch slammed the Democrats for their "height of irresponsibility" that would put the US economy at "greater risk."



"Desperate times call for desperate measures and the majority is showing how desperate they are with a bill that increases the tax burden on job creators and ship much-needed US jobs overseas," he said.



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