US HIRE Act: Potential Economic Shockwave for India's IT Sector

The US HIRE Act proposes a 25% tax on outsourcing payments, potentially impacting India's IT sector. Congress highlights the bill as indicative of a shift in US mindset against losing white-collar jobs to India. The bill, if passed, could significantly affect India's service exports.

The proposed HIRE Act, introduced by US Senator Bernie Moreno, aims to impose a 25% tax on outsourcing payments, sparking concerns about its effects on India's economy. Congress asserts that the bill reflects a growing US sentiment against losing white-collar jobs to India, contrasting past trends with China.

Congress leader Jairam Ramesh emphasized the profound implications for India's thriving IT services, BPO, and global capability centers. While other countries like Ireland and the Philippines face potential impacts, India's service exports are especially vulnerable.

The bill, yet to be passed, underscores the increasingly fragile India-US economic relationship. Ramesh warns that should the HIRE Act come into effect, it could ignite significant economic challenges, necessitating adjustments to India's economic strategies.

(With inputs from agencies.)