India’s $280-bn IT industry safe from potential US tariffs, says Karnataka IT Minister

Karnataka information technology (IT) Minister Priyank Kharge at the launch of the Karnataka Mid-Market GCC Report and the KATALYST GCC Handbook event.

Karnataka information technology (IT) Minister Priyank Kharge on September 9 said potential US tariffs on Indian IT services are unlikely to disrupt the country’s $280-billion export sector, highlighting India’s strong offshore delivery model and the global reliance on its technology talent.

Kharge, who is also the state's biotechnology, rural development, and Panchayat Raj minister, argued that the country’s talent base and offshore delivery strength give it resilience against such threats.

The comments were in response to a question on a recent Halting International Relocation of Employment (HIRE) Bill, introduced by a private member in the US Senate, and recent tariff calls by Donald Trump’s trade adviser, Peter Navarro. The two developments have rattled the sentiment of the Indian IT industry.

The bill seeks to impose a 25 percent tax on certain payments to foreign firms for services consumed in the US.

“It’s too early to say anything because the person (Navarro) who is saying has the habit of saying one thing in the morning and another thing in the evening. We have to wait and see whether it actually will be done,” Kharge said at the launch of the Karnataka Mid-Market GCC Report and the KATALYST GCC Handbook, in an apparent reference to the rhetoric on taxing IT services.

Also, read: US HIRE Bill clouds Indian IT outlook but faces steep political hurdles

The Minister highlighted that India’s talent pool and the trillions of dollars already invested in its technology ecosystem make it indispensable for global enterprises. “It's my personal opinion, the dependence of various geographical entities is way too much on the talent that we have here,” he said.

Interestingly, despite rising trade tensions and tariff talk in the US, American tech giants like Google, Apple, Meta, Microsoft, and OpenAI are ramping up investments in India. From major office leases in Hyderabad and Bengaluru to new engineering hubs and AI partnerships, India is quickly becoming a critical part of their global expansion plans.

This has also resulted in major US tech firms-Facebook (Meta), Amazon, Apple, Microsoft, Netflix, and Google (Alphabet)-having collectively hired over 30,000 new employees in India over the past 12 months.

Also, read: Big Tech giants defy US-India trade tensions, record strongest 12-month headcount growth in India

Meanwhile, even if the tariffs were to materialise, Kharge suggested the impact would be limited, pointing to the large offshore entities already operating in India. “I don’t think it should have an impact whatsoever. And I don’t think that the order is coming anytime soon,” he added.

The remarks come amid heightened anxiety in parts of the IT industry following global discussions on taxing cross-border services. Industry watchers say while tariffs could theoretically make Indian IT exports less competitive, the sector’s cost efficiencies, scale, and offshore delivery models provide a natural buffer.

Kharge’s comments add confidence at a time when global tech services are under scrutiny. He also reiterated Karnataka’s commitment to refining policies, improving infrastructure, and working with industry leaders to ensure the state remains the leading hub for innovation and IT exports.

Brand Karnataka

Speaking about Karnataka’s positioning, Kharge highlighted Bengaluru’s status as one of the fastest-growing cities in the world, with an 8.5 percent growth trajectory projected until 2035.

The state is home to over 30 percent of the country’s GCCs, with Bengaluru alone employing more than 6 lakh professionals in this sector. In the past three years, 43 percent of all new GCCs set up in India have chosen Karnataka.

While admitting infrastructure challenges that come with rapid urbanisation, Kharge added that the government is investing heavily across the state to ease bottlenecks and improve the ease of doing business.

The Department of Electronics, IT & BT, Government of Karnataka, also launched the Katalyst Karnataka GCC Handbook at the event Kharge was addressing.

Katalyst functions as a dedicated ease-of-doing-business cell, offering streamlined clearances, single-window support, and a practical playbook for new GCCs. The report outlined that Karnataka’s over 230 mid-market GCCs operate at just 35 percent of the size of larger peers but employ more than 74,000 professionals and consistently deliver superior innovation and productivity.

“Karnataka’s mid-market GCCs are maturing 1.4 times faster than their national peers. This shows the strength of our ecosystem, where talent, innovation, and supportive policies come together.”

Mid-sized GCCs

More than 480 mid-sized GCCs in India employ over 2.1 lakh professionals, a report by software industry body Nasscom and management consulting firm Zinnov said.

These mid-sized captive centres account for 27 percent of the total GCCs and 22 percent of all GCC units operating in India.

Mid-sized or mid-market GCCs are set up by enterprises with annual global revenue between $100 million and $1 billion.

The report, ‘India’s GCC Leap: Capturing Global Mid-Market Momentum’, revealed that in the last two years, 45 new mid-sized GCCs have set shop in India, accounting for 35 percent of new GCCs and 30 percent of new units during this period.