US President Barack Obama's remark that American firms were shipping more jobs to Bangalore than creating them in Buffalo (in New York state) had been "misinterpreted", an IT industry lobby said here on Wednesday.
"Nothing much should be read about Obama's comment on Bangalore and Buffalo. I think his remark has been misinterpreted. What he said was of the additional revenue he would get from his tax reform proposals, he would invest some of it in research and training so that more jobs get created," Som Mittal, president of the National Association of Software and Services Companies (Nasscom) told reporters.
Contending that the current US tax system gave US-based multinationals shipping jobs to places like India an unfair advantage over domestic rivals, Obama Monday announced plans to reduce tax breaks for them.
"It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, spelling out his proposals to close corporate tax loopholes and crack down on overseas tax havens.
Allaying fears of job losses or decline in outsourcing or off-shoring, Mittal said the Obama proposal was not about India but how American subsidiaries were structured overseas in light of the taxation method followed by US firms over the years.
Admitting that Obama's protectionist measure was a matter of concern for the industry, Mittal asserted that Nasscom would study the proposal to assess what impact it would have on outsourcing or off-shoring and do the needful if the bill got drafted.
"The good part is that we have a voice. If we see that it's impacting us in any way, as the bill gets drafted, we will do the needful," Mittal said.
The US accounts for about 60 per cent ($30 billion) of the $50-billion IT export revenue from India. About 70 per cent of the export revenue is generated by Indian firms and the remaining by multinational captives or third party vendors in the sub-continent.
Endorsing Mittal's views, former Nasscom president and Satyam board chairman Kiran Karnik said he was sceptical about Obama's tax proposal becoming a law.
"It (tax reform bill) is unlikely to become a law as US firms will be the hardest hit. Obama's proposal is of concern because it's a sign of protectionism. In the recent G-20 meeting in London, world leaders said they were against protectionism," Karnik said.
In a lighter vein, a leading IT firm head said Obama seemed to have got his geography wrong as he should have mentioned Beijing instead of Bangalore since more manufacturing jobs were shipped to China than to India over the years.
"Looks like Obama got his geography wrong. Jobs are not going to Bangalore but Beijing, as manufacturing jobs are going to China and not India. Only 1000-2000 back office jobs have come to India," the official said on anonymity.
Agencies
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