US raises pitch on outsourcing

The US State Department said if India wanted restrictions on outsourcing lifted, it needed to open up markets and reduce import tariffs to enable US businesses to invest here.

"This will reassure friends of India in Congress and give them arguments to prove that jobs are not merely flowing out of the US; that India is also creating jobs and helping business make money. Benefits of trade must be reciprocal," the US charge d'affaires in New Delhi, Robert Blake, told reporters here.

Blake noted that India had taken some steps, like lifting the foreign investment caps in telecommunications, and financial services. But this was not enough, he said.

"The US is for free trade and open markets. But we have to acknowledge that it is a two-way street. We are happy to outsource work to India because this is consistent with the US commitment to a free market. It helps give a competitive edge to American business. But the balance of bilateral trade remains heavily in India's favour. There have been efforts on India's part to liberalise the investment environment, creating optimism among US businessmen that liberalisation will continue. But much needs to be done. The US would like India to work together in the World Trade Organisation to identify ways to open new markets rather than close those that are already open," Blake said.

The envoy acknowledged that US-India relations had never been better, but despite a 13 per cent growth in bilateral trade in 2003, the trade gap had widened.

He hoped the two countries would be able to handle differences over issues like outsourcing in a businesslike way, without rancour.

He highlighted the growing strategic partnership between the US and India, adding that this was reinforced by improved high technology trade and cooperation in civilian nuclear energy, space and missile defence.

Blake said there was no contradiction between the conviction in a free market and the US introducing laws to prevent federal agencies from outsourcing and that it would only affect a small section of agencies in India. He said for free trade to succeed, there had to be demonstrable reciprocity.

The envoy was candid about it being an election year in the US and the fact that politicians "in the US like anywhere else" were concerned that India continued to be protectionist but was taking advantage of the US's free market policies to create jobs at the expense of the US.

"We welcome a robust commitment to trade and services within the WTO by India. India has an opportunity to move forward to strengthen trade and investment with us in sectors like accounting and financial services. This will reinforce the message that India is committed to the kind of economic cooperation in trade and investment that would allow us to achieve balance in our trade and employment generation," he added.

Blake made it clear that Washington was not seeking a quid pro quo from India. Both countries should open their markets so that it was mutually beneficial, he said.

He said the new US Ambassador, Robert Mulford, would arrive in New Delhi later this month.