Indian media have denounced Obama “anti-India” stance.
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Pres. Barack Obama’s promise to plug tax loopholes that allow deductions for American companies that invest in overseas companies is unnerving Indian outsourcing companies. Obama criticized a tax code that incentivized American companies with lower taxes to “create a job in Bangalore, India, than if you create one in Buffalo, New York.”
American companies, such as IBM and General Electric, have established wholly owned Indian subsidiaries to handle customer service and back-office operations and outsourced contracting work to Indian BPOs to take advantage of lower salaries in India, but in the process, reducing their American workforce by hundreds of thousands of workers.
India’s information technology and outsourcing sector employs 2.2 million people and according to some estimates attracts almost 60 percent of its business from American companies.
Indian media have denounced Obama “anti-India” stance, with the Times of India complaining that Bangalore has become a “catch-all term to hang U.S. economic woes on.”
But most tax experts say the impetus for American companies to set up Indian subsidiaries comes from lower costs, not tax incentives, so any changes in the tax code would have a negligible impact impact on India.
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