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US word on business process outsourcing

New Delhi, June 17: The Union government has been assured by the United States that the latter will discourage its states from banning the outsourcing of business processes.

Commerce minister Arun Jaitley said today that US trade commissioner Robert Zoellick has told him categorically that although some American states were introducing legislations to ban outsourcing, the federal government considers it a “bad policy” and was opposed to such moves. Zoellick also stated that the government would “try to resist them”.

However, briefing newspersons upon his return from the United States, Jaitley said that India did not agree with the American view that the ban introduced by five states falls under the purview of the respective states and that the federal government can do very little about it.

India cited its own example to the US on how the central government had prevailed upon its states to ban luxury tax as it was against the country’s international commitments.

The minister, however, was upbeat over the fact that the American states proposing to introduce the ban had been persuaded to strike off the more troublesome clause which would have made it mandatory for a call centre to route all the data through a local centre. This would have raised costs and made operations economically unviable.

Meanwhile, information technology minister Arun Shourie is reported to have stated that India plans to adopt the “China approach” to negotiate with the US for concessions in return for providing market access to American firms. He is of the view that since India is an important market for US goods this could be linked to the outsourcing issue.

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