New Delhi: India said on April 18 the proposed New Jersey Legislation against outsourcing for government contracts in IT smacked of protectionism and was tantamount to denial of market access.

"It is an issue of market access whose importance lay not so much in the limited impact it might have in the short run as in the strong protectionist signal it gave out," Commerce and Industry Minister Arun Jaitley told a visiting US Congressional delegation.

Jaitley told the delegation, which included influential members of India Caucus, that outsourcing offered numerous economic advantages to US firms such as reduction in their overhead costs and improvement in their competitiveness.

India had emerged as an attractive source for high-quality low-cost back office operations because of its competitiveness in this area, Jaitley said.

The delegation accompanied by US Ambassador Robert D Blackwill had detailed discussions with Jaitley on furthering bilateral trade and increasing foreign direct investment (FDI).

The delegation sought improved enforceability of contract conditions in the event of breach of contract involving damages, apparently referring to the failure of Dabhol power project that was promoted by US company Enron.

Jaitley told the delegation that the issue of enforceability of contracts applied not only to foreign investment but domestic investment as well and that the issue was being looked into.

PTI