CurrentAffairs Trade: The ban imposed on offshoring of government IT and back office projects to locations such as India by state of OHIO in US is against the spirit of free world trade and amounts to creating trade barriers.

This decision could trigger similar measures in other U.S. States. This measure  is not in the spirit of Indo-US strategic partnership.

“At a time when companies from across the globe, including those from the US, are participating in government projects in India, Ohio State’s ban on offshoring by government departments would discriminate against Indian companies”, said Dr. Amit Mitra, Secretary General, FICCI.

Coming at a time when the global economy is just out of a financial crisis and when countries need to work collectively, protectionist measures of any kind could deteriorate the situation further.

Citing a study by the US Chamber of Commerce (Washington D.C.), FICCI said that it is US companies that gain maximum from outsourcing. In fact a McKinsey analysis shows that every dollar of costs the United States moves offshore brings America a net benefit of $ 1.12 to $ 1.14. The same study also highlighted that worldwide sourcing will produce net benefits to Americans in terms of higher productivity, lower prices, better jobs, new export markets, and stronger companies.

Overcoming the challenge of growing unemployment is tough but  protectionism is certainly not the answer. This is setting the wrong precedence and giving the false impression that offshoring causes loss of jobs. What is not understood is the fact that offshoring work actually improves the competitiveness of the U.S. economy, its companies and government departments.

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