Overview
- The HIRE Bill under debate in the U.S. Senate would levy a 25% excise tax on outsourcing payments and disallow related deductions, with proceeds funneled to a Domestic Workforce Fund for training and apprenticeships.
- Indian IT and business services are highly exposed, with reports citing roughly 70% of sector export revenue tied to the U.S., raising the risk of cost shocks to new contracts and margins.
- Rajan argued the services levy would be more consequential than the recent $100,000 H‑1B fee hike, noting companies can increasingly deliver work virtually and hire locally for client‑facing roles.
- Industry and analysts point to possible mitigations through trade talks, including carve‑outs, phased implementation, grandfathering of existing contracts, and defined safe‑harbors for certain services.
- The bill was introduced by Sen. Bernie Moreno and referred to the Senate Finance Committee, and Indian political voices, including the Congress party, warned of significant fallout for services exports if it becomes law.