Industry associations have come out strongly against the US law barring the outsourcing of government work to companies outside the US.

"The passage of the law is unfortunate and unwarranted. Normally such provisions are not changed, perhaps US President George Bush will reconsider this," said Anand Mahindra, president, Confederation of Indian Industry (CII).

Similarly, Electronics and Computer Software Export promotion Council (ESC), said such a law not only went against the spirit of competition but would also affect the bottomlines of US corporates.

CII said this latest action showed a discrepancy and disconnect between what the United States considered good for India and what it was willing to do itself.

CII believes that India is taking examples from the United States and other developed countries on its path of liberalization and reforms.

However, such anti-liberalisation measures, when adopted by developed countries, and particularly by the US, which target developing countries will lead to greater protectionism in other sectors, thus impacting global trade flows.

CII said the government showed that it was possible to continue liberalisation even though elections were imminent.

"India and the United States have been steadily deepening their economic and strategic ties. Therefore, the passage of this law will be a speed-breaker on the road to closer ties. This is particularly unfortunate, since studies on the BPO sector have shown that the company that outsources gains more than the company to which it is outsourcing.

"In this particular case, since the Senate ban is on US government contracts, the ultimate loser is the US taxpayer, who will now pay more for government services," the CII statement said.

Business Standard