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Prospects for IT-Enabled Services Under a Indo-US FTA

Author

Listed:
  • Arpita Mukherjee

    () (Indian Council for Research on International Economic Relations)

  • Paramita Deb Gupta

    () (Indian Council for Research on International Economic Relations)

Abstract

ITES/BPO services is an important and growing component of India's trade in services with the US. While the Indian government has implemented several measures to support the growth of this sector, Indian companies face various barriers in the US market such as anti-outsourcing regulations, restrictive visa/work permit regime and concerns relating to protection of sensitive data. Multilateral negotiations would have been the best route to address many of these barriers, but with the recent suspension of the Doha Round of talks, it has become important for countries to evaluate alternative routes such as bilateral Free Trade Agreements. In fact, after the suspension of the multilateral negotiations, both India and the US have refocused on bilateral agreements. In this context, this study discusses the current and potential trade between India and the US in ITES/BPO services, identifies barriers to trade and explores how an FTA can enhance bilateral trade in this sector. The study shows that the US-FTAs have achieved a higher level of liberalization than in the WTO. It suggests various negotiating strategies for India such as a negative list approach, signing mutual recognition agreements in key professional services, asking for a H1B1 type of visa, pushing for removal of domestic regulation-related barriers, among others which would enhance market access for Indian companies in the US. It also points out that Indo-US collaborations for data protection, skill development and raising awareness of the advantages of outsourcing in the US would be mutually beneficial. The study discusses regulatory and other reforms which will improve the productivity, efficiency and global competitiveness of this sector and enable the country to gain from the FTA.

Suggested Citation

  • Arpita Mukherjee & Paramita Deb Gupta, 2006. "Prospects for IT-Enabled Services Under a Indo-US FTA," Indian Council for Research on International Economic Relations, New Delhi Working Papers 187, Indian Council for Research on International Economic Relations, New Delhi, India.
  • Handle: RePEc:ind:icrier:187
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    References listed on IDEAS

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    1. Drysdale, Peter & Garnaut, Ross, 1982. "Trade Intensities and the Analysis of Bilateral Trade Flows in a Many-Country World : A Survey," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 22(2), pages 62-84, February.
    2. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
    3. Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172.
    4. Kojima, Kiyoshi, 1964. "The Pattern of International Trade Among Advanced Countries," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 5(1), pages 16-36, June.
    5. Thomas Vollrath, 1991. "A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 265-280, June.
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    More about this item

    Keywords

    Indo-US FTA; GATS; Bilateral Agreements; business process outsourcing; IT-enabled services.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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