Washington, September 9
Amid indications that outsourcing could become a hot issue in the November polls, President Barack Obama has made his stand on the issue clear, saying that tax breaks should go to companies that create jobs in the US and not overseas.

Obama comments came close on the heels of the Ohio state Governor passing an executive order to ban outsourcing, a development that has raised concerns in India that is often described as the world's back office.

Significantly, Obama's policy speech on economy came in Ohio itself, where he made clear his determination to end tax loopholes that provide incentives for investment in overseas jobs, saying he will provide a generous tax credit to companies that create more jobs in the US.

"One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries," Obama said at Cleveland.

The President said he was determined to change that.

"I want to change that. Instead of tax loopholes that incentivise investment in overseas jobs, I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America," he said, with Ohio Governor Ted Strickland standing by his side.

With election due in November for 37 of the 100 seats in the United States Senate, and the opinion polls painting a grim picture for the Democrats, Obama sought to project the tax issue as a key policy difference between his party and the Republicans.

"I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America - not those that create jobs overseas. That's one difference between the Republican vision and the Democratic vision. And that's what this election is all about," Obama said.

Running behind in opinion polls, Strickland of Democratic party, who till now was going out of his way to woo Indian companies, last week passed an executive order that banned outsourcing, arguing that this undermines economic development and has unacceptable business consequences.

"Outsourcing jobs does not reflect Ohio values," Strickland said in a statement after he signed the executive order.

Reacting to the order, the Indian IT sector, which gets 60 per cent of its export revenue from the US, termed the move as discriminatory and said it amounts to a trade barrier.

The move, which comes ahead of Obama's visit to India in November, follows a controversial legislation that increased H-1B and L1 visa fees, hitting India's over USD 50 billion IT industry.

Obama said his proposal will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines and start putting their profits to work in places like Cleveland and Toledo and Dayton.

The US President said engineers, economists, governors and mayors of every political stripe believe that if the US wants to compete, it needs to rebuild this vital infrastructure.

"There's no reason Europe or China should have the fastest trains or the most modern airports - we want to put people to work building them right here in America. So this week, I've proposed a six year infrastructure plan that would start putting Americans to work right away," the President said.

Obama said because of the steps being taken by his administration, the economy is growing again.

"The financial markets have stabilised. The private sector has created jobs for the last eight months in a row.

And there are roughly three million Americans who are working today because of the economic plan we put in place," he said. — PTI