Commerce Minister Arun Jaitlet said on Monday that India had been successful in getting outsourced business from abroad including the US because of its competitive edge and by virtue of being a low cost economy.

A large number of Fortune 500 companies have shifted their research and development centres to India because they realise they would get the best of scientific minds at much lesser cost in India than in their own countries, Jaitley added, while addressing an awards function of the National Productivity Council. He said India's best allies in the US and Europe were their domestic industry.

Outsourcing and India: Complete Coverage

"The American industry got up and asked, 'how can you compel us to buy these services from within the US if we get them cheaper across the border?'" he said.

Jaitley said it was the US industry, which had argued that costlier domestic services imply that it will be non-competitive, therefore it is in their interest that they buy services from where it is the cheapest.

"We offered our services and products like drugs at much lesser rates in the international markets than the other countries, thus ensuring our competitiveness," he added.

For instance even from the European countries patients have started moving to India for treatment because the country is in a position to offer them the same quality treatment at one-fifth of the cost or even less than in their own countries, the minister said.

At the same time India has refrained from imposing tariff barriers and kept its international commitments of lowering custom duties on various products.

Jaitley said there were very large number of goods and services in which the western economies have outsized themselves, their costs being high, they are good in high technology areas; financial sector, insurance and banking.

The rest of the market is open for the developing countries like India, he said.

Jaitley said India is perceived as a low cost economy. "But there is somebody very close geographically whose cost is lower than India's".

"Therefore, our idea should not be to beat the high-cost western economies but to beat the nearest competitor. That is what China has been doing in the manufacturing sector and India in a large part of its service sector".

The success in India's manufacturing sector depends on how quickly it is going to be globally competitive.

Major carmakers have already made India a large manufacturing base for the international market. India exported automobiles and parts worth over $500 million in 2002-03.

Jaitley gave away productivity awards in agriculture extension services, animal feed processing units, bio-fertiliser producers, dairy development and production, inland and marine fish production in cooperative sectors, poultry production and development, warehousing sector, meat processing industries and fruits and vegetable processing industries.