The HIRE Bill impact could significantly reshape India–US trade relations, especially in the services sector.The Halting of International Relocation of Employment (HIRE) Bill is proposed legislation that was recently introduced in the U.S. Senate by Republican member Bernie Moreno on September 5. The Bill’s intent is to limit the outsourcing of American service jobs to countries like India, the Philippines, and China. The bill establishes a 25% tax on outsourcing service payments: “an outsourcing payment shall mean any payment to a non-United States person…including any payment for fees, royalties, premiums, or otherwise that relate to, or are made in exchange for, labor or services provided to consumers located in the United States.”
The HIRE Bill has a broad definition of “outsourcing payment,” covering everything from coding and IT support to other consultation and business process services. If passed in its current form, it becomes effective January 2026. The tax would also be nondeductible under federal tax law, making it even more expensive and less enticing to U.S. companies that contract outside the U.S. with another company.
Read more about the HIRE Bill and its legislative status on the official U.S. Congress Bill Tracker.
While it must go through the process of Congress as a proposal, the Bill indicates political resistance to globalization and economic offshoring, especially digital services. Critics argue that to construct unknown bill responses risks deteriorating America’s global economic relations and scope for potential job creation for U.S. workers.
HIRE Bill Impact on India’s Export Economy
The HIRE Bill might have significant implications for India as a principal global service export hub. In 2023, India sent 25% of its total services exports, equal to $45 billion, to the U.S. Major segments are in software, consulting, R&D, and design. If the HIRE Bill gets enacted, costs of Indian-origin service levels in cost-sensitive sectors, such as IT and software support, will likely see a decrease in overall demand.
Higher-value segments with higher skill-specific problem-solving and less reliance on costs, which include consulting and R&D services, should continue to receive contracts from the U.S. However, coding, debugging, data support, and other cost-sensitive sectors may get priced out of the U.S. market.
Although the intent of the Bill is to “reshore” American jobs, the lack of qualified STEM talent in the U.S. means there will be limited feasibility for reshoring jobs. The U.S. Chamber of Commerce noted the U.S. can’t find workers with the capacity to perform technologically advanced work needed to fill the role of tech innovation.
Economic Considerations
The 25% tax on outsourcing will uniformly apply to every country. Therefore, India will be unable to suffer alone, but globally, it may lose its advantage. The larger concern is lower margins, fewer new deals, and higher costs to operate. Even if demand is sticky, cost pressure will hurt suppliers, clients, and consumers.
In the end, the primary beneficiary may be the U.S. Treasury.
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