A new law passed by the New Jersey Senate on Thursday banning outsourcing of government contracts to overseas may adversely impact India.

The bill passed by a 40-0 vote was proposed earlier this year by Senator Shirley Turner (D-Mercer) following newspaper reports that e-Funds Corporation of Arizona, that won the $326,000 a month contract to process welfare and food stamp cards for New Jersey residents, had shifted its operations to Mumbai, India, to save money.

Turner told rediff.com in an interview before the passage of the bill that her sole motivation in proposing the legislation was to stop taxpayers' money from being used to export jobs.

"I want to make it perfectly clear that I have no concern about any particular country - today it is India, tomorrow it could be Africa. The important thing for me is we are Americans and we have to take care of America first," she said. "To me this (moving operations) was unfair because when they got the contract they were operating within the US and paying higher wage and then when they moved out, they took the tax payers dollars to a company in a foreign country to hire foreign people."

Turner repeated the arguments on Saturday after the passage of the bill saying that the state should look out for its own people instead of developing cheap labour force in countries where benefits are rarely given to workers.

The bill that will be sent to the assembly for passage before being signed by the Governor into a law, has drawn flak from lawmakers and business organisations alike, some of then calling it shocking.

"In these days of cost cutting, outsourcing state jobs to save money is being done everywhere. If the state has the capability to do in-house jobs, then it should do it," said Upendra Chivukula, New Jersey assemblyman and also a democrat.

eFunds has also moved operations for about a dozen other states to India in a bid to cut costs, news reports said.

"Companies from other states will continue to outsource and be more profitable than those in New Jersey, ultimately industry will move out of the state and New Jersey will become the backwaters of the United States," Rajeev Khanna, president of the India American Chamber of Commerce, said.