On foreign procurement, Indian opposes US law to impose tax
December, 30th 2010
Government on Thursday said the recent US legislation imposing a two per cent tax on foreign procurement and extending the present visa fee till 2015 will create a bias against the Indian IT sector.
The US government has recently passed a bill --James Zadroga 9/11 Health and Compensation Act-- that will impose two per cent tax on the US government procurement from foreign companies and also extend the present visa fee on certain categories by one more year from 2014 to 2015.
Terming the new law as a "retrograde" step, Minister of State for IT and Communication Sachin Pilot said "such legislations will only seek to undermine the contributions of the Indian IT and tech companies to the US. It will create a non-level playing field for the Indian firms"
The law has caused considerable concern and apprehension to the $60 billion Indian IT industry , which gets over 60 per cent of its business from the US.
The James Zadroga Act, following the Border Security Law, is likely to impose an additional USD 100-200 million burden on these companies.
Pilot said the government has already taken up the issue with the trade representatives in the US.
He will also hold meetings with the executives of Indian IT firms in January
The minister said the US should not discriminate against the Indian IT sector as the top 6 Indian IT companies alone have created some 35,000 jobs in the US.
In August, the visa fee hike, under the US Border Security provisions, was valid till 2014.
Incidentally, the move comes after both countries agreed to reduce trade barriers and abjure protectionist measures for facilitating greater movement of professionals and investors during the recent visit of US President Barack Obama.