New Delhi, Feb. 2: Outsourcing has become a handy tool in the time of elections — in America as well as in India.
Foreign minister Yashwant Sinha tonight chose stinging soundbites to respond to Washington’s attempt to link outsourcing with India opening up its market faster.
“The linking of the two — outsourcing and India’s opening up its market in the insurance and the banking sectors — smacks of retaliation,” he said this evening. “This is not the way to go about it.”
“The US has to realise that by outsourcing, the companies manage to remain competitive. So, it saves some jobs. If they don’t outsource, they risk becoming not competitive,” Sinha added. “This is where they have to realise their own interest.”
Earlier in the day, the charge d’affaires of the US embassy here, Robert Blake, had sought “greater balance and greater liberalisation” on India’s part to ensure that American investors have as many opportunities here as Indians have in the US.
“The most important step India can take to counter efforts to restrict outsourcing is to continue to open its markets,” he said. Blake spoke about US interest in financial services, insurance and telecom sectors in India, noting there were caps on foreign investment in all these areas.
A legislation banning subcontracting of government jobs outside the country had been recently passed in America, triggering fears in India that more such measures could come in the election year in the US.
India, where elections will be held before that in America, had reacted sharply to the legislation with the Prime Minister raising the issue in his campaign speeches. Sinha tonight added his voice to the chorus in the same spirit that has prompted American lawmakers to address a domestic concern.
Blake said the two countries needed to work together in the Doha round of the WTO and elsewhere to identify ways to open new markets.
“India can help in this task by accelerating its programme of trade liberalisation and by helping build positive momentum in the Doha round of talks and setting ambitious goals for new commitments.”
Blake said free trade and open markets brought benefits to all. “But the commitment to and benefits of trade must be reciprocal. To succeed, trade must be a two-way street.”
US trade representative Robert Zoellick is scheduled to visit Delhi later this month and outsourcing is likely to be the focus of discussions during his meetings with the Indian leadership.
The strains on outsourcing come days before the US ambassador-designate to India, Robert Mulford, is scheduled to arrive in Delhi to take up his new assignment. An international banker of repute, Mulford has been chosen to strengthen economic and trade cooperation.