Obama`s vow to affect IT cos; India against protectionism: FM

New Delhi, Feb 28 (PTI) As US President Barack Obama
vowed to eliminate tax benefits for American firms shipping
jobs to foreign countries, India has said it is against any
protectionist move as it would affect its IT industry.

"The IT industry will be affected due to the impact of
financial meltdown...substantial number of Indian workers are
there..we will have to address this issue...we are opposing
protectionism, not only here but at every forum," India's
Finance Minister Pranab Mukherjee told Karan Thapar in an
interview to private television channel CNN-IBN.

"We can't just go for country specific solution for such
problem...issue is that our IT industry will be affected," he
said.

Mukherjee added that the protectionism of any kind at
this time should be avoided and Prime Minister Manmohan Singh
also made it quite clear at G-20 meeting last year.

On February 26, Obama in his maiden budget speech said
the US government would do away with tax breaks for firms
outsourcing jobs to overseas destinations, including India. At
the same time, the administration would be providing tax
relief to 95 per cent of American working families.

Nearly 1,000 US firms, which have shipped their jobs
overseas, are expected to be affected with the proposed
elimination of tax incentives. The plan mainly refers to one
of the provisions in the tax code that allows companies to pay
less taxes for profits earned from foreign shores.

However, the US is yet to outline the ways to abolish
tax breaks for the entities outsourcing jobs.

Majority of the Democrats are against the provision,
saying the same was encouraging firms to move jobs overseas
and even cut the local positions. PTI