Outsourcing ban- USA – India protests

US President Mr. Barrack Obama is facing pressure from local politics to reduce unemployment by banning outsourcing. Democrats used to think that Americans should do the works that command premium in the world leaving the small valued back-desk operations to third world countries. Americans should concentrate on executive and supervisory positions in large scale industry like Planes like Boeing, Arms production like missiles, Space, Agriculture, Nuclear production, ship building, Oil production etc. But of late, USA is losing world trade and so unemployment is increasing. This may be due to economic and political policies of USA.

For example, US Govt is not trying much to induce their local industries to purchase more companies in the world which are cheaper and available throughout the globe thus increasing employment and income to their country.

India and China are going in full swing to do that and thereby increasing employment of their countrymen. USA should follow this pattern. For example, Global countries are worried about global heat effect and looking for solar energy, shallow gas energy and wind energy etc. USA should try to gain foothold in this globally and grab the market and give lot of employment to its countrymen. UNO is the main key to drive that point and UNO is depending on USA funding and hence taking global warming as a threat, USA can go in for switching to solar and other non-traditional sources including nuclear energy. Also USA should enrich the education of their citizens in software by sending them to india for training to their students and offer scholarships to them.

Also USA involvement in Afghanisthan and Iraq for showing itself as super power drained its resources much. Its main fault is to demolish Russia another erstwhile super power. USA intention of remaining as super power is slowly fading as China is replacing Russia. So USA should end up all wars and concentrate on nation buildings. USA should not earn ill-will of Indians who are great admirers of Americans and India is a check on Pakistan. USA can play only background political activities in problem countries rather than openly occupying and trying to control. This costs manpower and money thus making USA to have fear of double dip depression.

Of late, in order to keep his party to gain popularity in Nov 10 senate elections American President started saying that tax breaks should go to companies that create jobs in the US and not overseas. This comment came in the background of the Ohio state governor passed an executive order to ban outsourcing, a development that has raised concerns in India that is often described as the world’s back office.

Reacting to the order, the Indian IT sector, which got 50 per cent of its export revenue from the US, termed the move discriminatory and said it amounted to a trade barrier. There is a case for India to learn from this. India is not opening all its Govt procurement plans in overseas to global tenders under a WTO protocol. This resulted in huge orders not going to USA. USA consider this as trade barrier. Indian Govt should agree for allowing USA to participate in global tenders in Govt procurement in exchange for an agreement on services covering all modes should be considered. India refused to be member of WTO panel and instead it announced its decision to become an observer on the WTO panel. This infuriated USA to take retaliatory action and naturally first it plans to impose ban on Indian companies. Now India cannot go and appeal to WTO regarding the ban as it is not a full member and india is having restrictive trade barriers.

India has to open up more to USA. More purchases help India indirectly to boost USA trade ambitions. The recent decision of the Indian civil aviation sector to buy more Boeing aircraft will assuage USA. But Indian Nuclear liability clauses imposed by Indian politicians on US companies made USA to re-think about Indian trade. Bhopal tragedy raised many eyebrows in India and present Govt was compelled to impose stringent clauses in nuclear plants working in India on overseas companies thus putting spokes mainly to USA which expected good business from India.

In the background of the above, it is to be noted that Switzerland remains the world’s most competitive economy, while India dropped two places to 51, according to the World Economic Forum’s annual rankings. The United States has fallen from second to fourth after losing the top spot last year.

C.R. Venkata Ramani


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