India's information technology sector may face a fresh challenge if a new US legislative proposal aimed at curbing outsourcing is passed.

The Halting International Relocation of Employment (HIRE) Act, introduced by Republican Senator Bernie Moreno of Ohio, seeks to discourage American companies from hiring foreign workers.

The Halting International Relocation of Employment (HIRE) Act is designed to reduce outsourcing by US companies, particularly work sent abroad that benefits American consumers.

If enacted, it would impose a 25% excise tax on payments made to foreign workers and restrict companies from claiming these payments as tax-deductible expenses.

The proposed law also aims to promote domestic job growth by channelling the tax revenue into a Domestic Workforce Fund, which would finance training programmes and apprenticeships for American workers.

According to Reuters, India's $283-billion information technology industry has long been a global outsourcing hub, serving clients such as Apple, American Express, Cisco, Citigroup, FedEx and Home Depot.

Analysts and lawyers told Reuters that the sector now faces a period of uncertainty, with clients reportedly delaying or renegotiating contracts while the US considers the HIRE Act.

Source:Ndtv