India’s $250 billion technology outsourcing sector is staring at a potential shock from Washington. The proposed Halting International Relocation of Employment (HIRE) Act would slap a 25 percent tax on US companies for payments to foreign workers and block those expenses from being tax deductible.
Such a measure would cripple the economics of outsourcing, threatening Indian giants like Tata Consultancy Services and Infosys, as well as global capability centers that employ hundreds of thousands.
The United States remains the single largest market for Indian IT, generating more than half of sector revenues. Undermining this relationship would harm not just India’s growth but also US companies that rely on cost-efficient services and skilled engineers.
India has taken steps to ease tensions, including scrapping its digital “Google tax.” Washington should avoid punitive measures and instead strengthen trade ties with a partner critical to America’s digital competitiveness.