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LISA MULLINS: When President Obama introduced his tax proposal, he described a few things that were wrong with the current system. For instance, he noted: “It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” Well, the BBC's Zubair Ahmed says that remark made India pay attention.

ZUBAIR AHMED: This morning, all the newspapers have displayed the news prominently on the front page. The tone and tenor of the debate was that the proposals would mean that the American companies might draw back some of their operations in India, though there were some saner element who tried to argue that American companies were in India not because they were getting tax rebates on creating business outside of America, but because they find a huge talent pool dirt cheap in India. So they will keep their operations intact in India as long as the country continues to provide them with cheap labor. That was the saner element. But the media largely created a kind of sort of scare mongering.

MULLINS: What is the evidence on the ground? I mean, are any jobs being lost now? Is anybody expecting that jobs will be lost as a result of changes that President Obama is suggesting?

AHMED: If you look at the evidence on the ground, there are a lot of multinational companies from America who are doing great business in India. They've got huge workforce. For example, General Electric has got thousands and thousands of workers in India. IBM has got 74,000 people working for them in India. And of course, there was few job losses because of the global economic crisis, but by and large, the India operations of the multinational companies, especially American companies, have not been affected.

MULLINS: Yeah. We should say when you were mentioning IBM, General Electric, Citigroup as well, there are some reports that say that India's information technology and outsourcing companies employ about 2.2 million people, and American companies account for 60 percent of their business. But on the other hand, we do know that there are some American companies that have already pulled out, and maybe you can tell us the reason why, even prior to President Obama talking about these changes in the tax code; two airlines, in fact United Airlines and Delta Airlines.

AHMED: There are some smaller American companies which have pulled out because it was not making any business sense for them to continue. They just couldn't do that. But it's a huge presence of the Americans here. There are not small companies; there are big American companies here. They are continuing, and they haven't really announced that they are going to roll back because of the economic crisis. On the contrary, General Electric and IBM have sort of got some more outsourced work to India after the global crisis hit the American shores.

MULLINS: Most Americans know that if for instance they're going to make a plane reservation, they're going to be talking to someone who is in India at a call center. India has become a focus of interest for American multinationals for other reasons as well, as more Indians themselves can afford more goods and services. How would the change in the American tax code, if it does indeed happen according to President Obama's plan, affect direct foreign investment into India?

AHMED: See, the Indians fear that if American administration makes investment abroad more difficult and makes it conditional, it would have direct impact on India as many Indian businesses rely heavily on American investment.

MULLINS: Well, when it comes to Bangalore itself, there was an editorial in the Times of India that said, “Bangalore has become a catch-all term to hang US economic woes on.” Is that the feeling there, that the United States is giving India a bad rap?

AHMED: The honeymoon with Mr. Obama seemed to be over some weeks ago, when we proposed that he would consider bailing out only those American companies which do not outsource work outside of America. That was big headline in India. Here, the feeling is that Mr. Obama, who sounded very friendly to India, suddenly because he has to save the American economy, he's doing it at the cost of the Indians and especially the Indian outsourcing industry.

MULLINS: All right. Thank you very much for the perspective from Mumbai, India. Zubair Ahmed, the BBC's Mumbai correspondent. Thank you, Zubair.

AHMED: Thank you, Lisa.

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