US HIRE Act Threatens India's IT Sector: Why White-Collar Jobs Are Now Target

In a post on X, he said that HIRE Act reflected a growing mindset in the US that white-collar jobs should not be "lost" to India, just as blue-collar jobs were "lost" to China. This protectionist sentiment could have far-reaching implications for the India-US economic relationship.

In a post on X, Ramesh said, "On Oct 6, 2025, Senator Bernie Moreno of Ohio introduced a Bill in the US Senate titled 'Halting International Relocation of Employment Act' or 'HIRE Act.' The Bill has been referred to the Senate Committee on Finance."

https://x.com/Jairam_Ramesh/status/1985557530504765892

The Bill could significantly impact India's exports of services, which have been a success story over the past quarter-century. India's IT industry, which has grown exponentially, could face a major setback.

"The Bill proposes a 25% tax on any US person making an outsourcing payment, defined as 'any money paid by a US company or taxpayer to a foreign person whose work benefits consumers in the United States,'" he added.

Ramesh pointed out that the legislation "has a direct and deep impact on India's IT services, BPO, consulting and GCCs (global capability centres)."

He added that while other countries like Ireland, Israel, and the Philippines may also be affected, "the maximum effect will be on India's exports of services which has been a marked success story over the past quarter of a century."

If the Bill becomes a reality, it could lead to job losses in the IT sector, which could have a ripple effect on the Indian economy.

He further wrote that "the Bill in its present form may or may not pass. It may get modified. It may just linger. But one thing is clear, the Bill reflects a growing mindset in the US that while blue-collar jobs were 'lost' to China, white-collar jobs should not be 'lost to India.'"

Ramesh observed that "nobody expected a year ago that the India-US economic relationship will take so many knocks, of which the HIRE Bill is another reflection."

Concluding his post, he cautioned, "If ever HIRE becomes a reality, it will light a fire in the Indian economy which may have to face a new normal in relation to the US."

The remarks came in the backdrop of the HIRE Act, which was recently introduced by Senator Bernie Moreno in the US Senate. The Bill seeks to impose a 25 per cent tax on outsourcing payments made by U.S. taxpayers to foreign persons for services that benefit American consumers.

Introduced in the 119th Congress and referred to the Senate Committee on Finance, the Bill proposes to amend the Internal Revenue Code of 1986 to include an excise tax on outsourcing payments. These are defined as "any premium, fee, royalty, service charge, or other payment made in the course of a trade or business to a foreign person with respect to labor or services that benefit consumers located in the United States."

Under the proposed legislation, the 25 per cent tax will apply to any US person making such payments. However, corporations or partnerships organized under the laws of a US possession will not be considered "foreign persons."

To ensure compliance, the Bill directs the US Secretary of the Treasury to issue regulations preventing tax avoidance through related parties, controlled foreign corporations, intermediaries, or transfer pricing arrangements.

In addition, the HIRE Act mandates that US persons making payments to foreign entities must file returns or information reports identifying such transactions as outsourcing payments. Corporate officers will be required to certify these reports under penalty of perjury.

Failure to comply or pay the outsourcing tax will attract stricter penalties, as the Act amends Section 6651(a) of the Internal Revenue Code to raise the penalty rate to 50 per cent and removes the existing cap on cumulative penalties.

The legislation also establishes a "Domestic Workforce Fund" within the US Treasury. The revenue collected from the outsourcing tax and associated penalties will be directed toward this fund, which will support workforce development, retraining, and apprenticeship programs administered by the Department of Labor.

States will also receive grants for initiatives aimed at communities affected by job displacement.

Furthermore, the Bill proposes to deny income tax deductions for any outsourcing payments, thereby preventing US businesses from claiming such expenses under Section 280I of the Internal Revenue Code.

If enacted, the amendments and tax measures outlined in the HIRE Act will come into effect for payments made after December 31, 2025.

- ANI