When America sneezes, India catches a cold. The old adage seems to show its relevance yet again. There has been a considerable buzz in India Inc after US President Barack Obama?s move to change tax rules related to US companies? overseas operations came to the fore. Obama has been playing the anti-outsourcing card since he entered the Presidential race. The question here is how it is going to affect India Inc. According to software industry body, Nasscom, the change in policies will not affect Indian software services companies. This is a domestic tax issue. It is not about outsourcing, says Pramod Bhasin, Chairman, Nasscom.
The tax proposals may point towards more protectionist measures from the US in the queue. Anything that creates any kind of protectionism and stops globalisation will be harmful to the standards of living around the world, even in the country that initiated it. A majority of the US businesses are saying that the recently proposed measures are bad not just for the US economy but for the global economy, as Honeywell Chairman and CEO Dave Cote shares.
Whereas India?s second largest software exporter Infosys says that it?s not going to affect India too much. Infosys released a statement that stated, ?The current proposal, as we understand, is to close corporate tax loopholes on US multinational corporations and crack down on their overseas tax havens. We do not believe that it has anything to do with IT outsourcing done by US corporations.?
Wipro, India?s third largest software services exporter opines differently. The protectionist measures of the US government is a matter of concern, believes Azim Premji, Chairman, Wipro. The steps proposed were contrary to the statements made by the US president on expanding free trade at the recently held G20 Summit. Reacting to Obama?s tax proposal, Premji adds, ?We are reading too much into it, one needs to wait and see.?
General Electric (GE) India?s President and CEO Tejpreet S Chopra, says it is too early to talk about probable ramifications of Obama?s tax restructuring on the company?s business and on the Indian economy. There is a long drawn process to it, and there is a very long way to go before any tax reforms, he avers.
Chopra affirms that a change might not have a large detrimental effect on India as corporate tax rates here are very similar to that of America. And GE?s commitment to continue investing and growing in the country would not be hampered as a result of changes in tax structure, as the opportunities to grow in areas such as energy, gas and healthcare here far outweigh tax benefits.
With inputs from Shreya Roy