India Warns of Economic Collapse Due to US Bill Imposing Tax on Outsourcing

India's main opposition party, the Congress Party, has warned that the US Senate bill known as "HIRE" (Halting International Relocation of Employment) could "set the Indian economy on fire" if enacted. The bill proposes a 25% tax on any American entity that pays for outsourcing services.

Impact on Indian 'White-Collar' Jobs

• Growing US Mindset: Jairam Ramesh, Congress General Secretary in charge of Communications, stated that the bill reflects a growing sentiment in the US that while "blue-collar" jobs were lost to China, "white-collar" jobs (professional services) should not be allowed to be "lost to India."

• Deep Impact on Services: Ramesh noted that the HIRE Act, introduced by Senator Bernie Moreno of Ohio last October, would have a "direct and profound impact on the Indian IT services, Business Process Outsourcing (BPO) centres, consulting, and Global Capability Centres in India."

• Most Affected: Ramesh indicated that although other countries would also be affected, the biggest impact would be on India's service exports, which he described as a "remarkable success story over the past quarter century."