India today said its software services industry was facing non-tariff barriers such as taxes, visa problems and legislation in the US, despite its huge contribution to the US economy.

A top government official said India would take up these issues with the relevant authorities in the US government very soon.

Outsourcing and India: Complete Coverage

"The software industry is paying $300 million in social security taxes in the US which is likely to rise to one $1 billion by 2008. In Japan, the 20 per cent withholding tax on onsite and offshore services make the Indian industry uncompetitive," SL Lakshminarayan, additional secretary, information technology department, said on Monday at seminar organised by Associated Chambers of Commerce and Industry of India.

He also said the government hopes to have a more meaningful dialogue with the US after the elections were concluded in both the countries.

Acknowledging the need for sustained efforts to overcome non-tariff barriers like moves to ban outsourcing, he said government was providing support to the industry in its effort to fight outsourcing backlash.

"We are supporting Nasscom in its campaign against outsourcing backlash besides offering inputs into negotiations," he said.

He said National Association of Software and Service Companies had initiated its global public relations campaign in January last year targeting mainly in the US and UK where the key objective was to confront essential policy issues in the US Congress, Bush administration and key states and UK Parliament.

"The major challenges were the proposed legislation in states like New Jersey and Maryland where bills have been introduced against outsourcing but were currently on hold. In Indiana and Michigan, bills have been tabled," Lakshminarayan said.