India Eyes Talks With U.S. Over Outsourcing Issue

March 5, 2009 9:44 p.m. EST

New Delhi, India (AHN) - New Delhi plans to discuss with Washington a plan by the Obama administration to end tax breaks to U.S. firms that outsources jobs to India.

"We have to ensure what they (U.S.) are doing is WTO (Word Trade Organization) compatible," India's Commerce and Industry Minister Kamal Nath said in New Delhi, according to Hindustan Times. "Outsourcing of technology development by large companies cannot be switched on and off."

Nath was reacting to U.S. President Barack Obama's speech in Congress last week that his administration will discourage American companies from outsourcing jobs to cheaper countries like India by eliminating the tax breaks given to such firms.

The plan affects about 1,000 U.S. firms or 60 percent of India's outsourcing market. The firms include General Electric, Microsoft, Hewlett-Packard, Motorola, Pepsico and Proctor & Gamble.