New Delhi: Terming the proposed changes in tax law by the US government as a ‘protectionist approach´, former Nasscom president Kiran Karnik has said the move could hurt American companies.
“This is obviously more driven by politics than economics and would affect the competitiveness of US companies... This is a protectionist approach and could have a vicious circle effect and lead to other countries adopting similar steps,” Karnik told PTI.
Karnik, who is also the chairman of Satyam board, said he did not expect the Bill to be passed into a law as it would impact businesses.
Asked about the impact on Indian IT industry, Karnik said, “Indian companies have an edge not just in terms of cost, but also features and flexibility and that would help Indian firms maintain lead.”
President Obama proposes to disincentivise American multinational companies through tax reforms from transferring jobs and processes to lower cost destinations.
India Inc had earlier termed the US President’s move to end tax breaks for outsourcing US companies that invest and create jobs abroad as a “retrograde” step.
National Association of Software and Service Companies (Nasscom) said Obama’s tax proposals will impact US-headquartered companies with overseas operations as more than half of their revenues come from overseas markets.