India's Weak-Kneed Reaction to Earlier US Discrimination leads IT Sector to become a Target of Anti-Outsourcing Politics again

India’s IT Sector had recently become a victim of new US Protectionist Policies when US Legislature imposed a $2000 Visa Fee on Companies with a Large Proportion of Foreign Nationals.India’s weak protests had failed to change the legislation which was signed onto Law by President Obama.I had written that India should have retaliated against US interests as well but India’s Government is not known for its proactive policies.Now the IT Sector which is one of India’s Success Stories has come under fire again.The US State of Ohio has legislated that no government body can outsource work.This is again directed towards Indian outsourcers which had been disparaged by a US Senator as a  “Chop Shop”.Note India-US Relations had improved dramatically under President Bush with the signing of the historic 123 agreement.However under President Obama relations have only gone downhill.The Indian Public has a very favorable impression of the US unlike many other parts of the world.However such actions will lead to a souring of relations between the world’s 2 largest democracies.

Ohio bans outsourcing to India, Infosys concerned – NDTV

The American state of Ohio has imposed a ban on outsourcing of government IT projects to offshore destinations such as India. TCS, India’s largest IT company, runs a project in Ohio.The move is likely to affect Indian companies that derive more than 50 per cent of their revenues from the US, though not necessarily from the government sector. Many Indian companies have shifted their priority to the government sector in the wake of recession and this move is likely to throw a spanner in their new strategy.Only last month, US President Barack Obama signed into law a new Border Security Bill proposing a steep hike in some categories of H-1B and L-1 visa fees. The Indian government had threatened to take the US to the World Trade Organization (WTO) over the new law saying it targeted Indian companies unfairly.

How Should India React

If India again does not take tough action and just resort to empty threats,it will invite further discriminatory action.China despite its huge export surplus has retaliated against the US by putting duties on Chickens Importsfrom the US.Despite a Massive Trade Deficit,USA has been reluctant to take on China.But in case of India,there have been no such compunctions.India is a Huge Growing Market which every Company aspires to go.India can use this new found leverage to make US toe its line.Note India’s Huge Nuclear and Defense Markets are being eyed hungrily by US Firms.Retaliation in the form of  cancelling a prestigious Defense Contract to a US Company  would send the message to the US Government.