Congress leader Jairam Ramesh issued a dire alert on Tuesday, cautioning that the US Senate's proposed Halting International Relocation of Employment (HIRE) Act could unleash economic turmoil in India by slapping a 25 percent tax on American payments for outsourced services. Introduced on October 6 by Ohio Senator Bernie Moreno and now under review by the Senate Finance Committee, the bill targets any funds transferred by US entities to foreign workers whose efforts benefit American consumers, directly threatening India's thriving IT and BPO sectors.

Ramesh highlighted the bill's potential to devastate key pillars of India's economy, including IT services, business process outsourcing, consulting firms, and global capability centers (GCCs), which have been cornerstone successes over the past quarter-century. While nations like Ireland, Israel, and the Philippines would feel the pinch, India— as the dominant player in services exports—stands to suffer the most severe blow, potentially disrupting millions of jobs and billions in revenue that fuel growth and innovation across the country.

The legislation reflects a deepening American sentiment that blue-collar manufacturing jobs were sacrificed to China, and now white-collar opportunities must be fiercely protected from offshoring to India. Ramesh noted that the bill might stall, evolve, or fail entirely in Congress, but its very existence signals a troubling shift in bilateral economic dynamics, catching many off guard just a year after optimistic forecasts for India-US trade relations.

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If enacted in its current form, the HIRE Act would impose a steep 25 percent levy on outsourcing transactions, compelling US companies to rethink cost-effective global partnerships and possibly triggering a mass relocation of operations back onshore. Ramesh warned that such a reality would "ignite a crisis" in India's services-driven economy, forcing a painful adaptation to a new normal where access to the lucrative US market becomes far more restricted and expensive.

This development adds to mounting challenges in India-US economic ties, underscoring the need for proactive diplomacy and diversification strategies to safeguard against protectionist policies. As the bill progresses through committee stages, Indian industry leaders and policymakers are closely monitoring its trajectory, bracing for potential ripple effects that could reshape global outsourcing landscapes for years to come.

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