The US Congress and Senate passed a legislation stating that all Indian IT companies will have to pay a set amount to the victims of Sept 11 terror attacks. The legislation was passed on Wednesday, Dec 22 to a booming majority. The move will spell doom for the IT majors because the new 2% excise tax on goods and services will effect foreign suppliers including India and China. The effort will lead to a substantial hike in the cost of technology.
Indian companies have always been lauded for their Corporate Social Responsibility, but this new directive by the US govt will act as a major deterrent to IT plans. The legislation is likely to be implemented by July next year and hopes to raise $4.2 billion towards the 9/11 victims welfare.
India has shown its protest in strong words and called it a 'retrograde step" in Indo-US trade relations. The Commerce and Industry Minister, Anand Sharma in a letter to US trade representative Ron Kirk wrote that the move was against the mutual conditions to reduce trade barriers between both countries. “The passing of such a legislation would, to my mind, be a retrograde step for greater trade engagement between India and US," Sharma added.
The bill termed the 'James Zadroga 9/11 Health and Compensation Act of 2010' is named after the 34-year-old NYPD officer who succumbed to respiratory illness as an after-effect of the terror attacks. The US has close to 60,000 workers enrolled for treatment programs related to 9/11 attacks.
The protectionist bill evoked strong feelings among IT companies back home. "It is very unfortunate that the US is raising its work visa fees for unrelated events. It is just very unfortunate," said TV Mohandas Pai, head, HR and member of the board, Infosys.
President of the National Association of Software and Services Companies Som Mittal said that US lawmakers seem to have developed a new practice of unfairly taxing foreign companies to pay for domestic issues. “The bill is a violation in spirit of the joint communique signed by President Obama and Prime Minister Manmohan Singh."