The $110 billion IT services and BPO sector will not be immediately impacted by the U.S. government shutdown, according to industry body Nasscom, as majority of the business that the industry does is with the private sector.
“A majority of the business that our industry has is with the private sector, and is not directly dependent on federal spending. Hence we do not see an immediate economic impact,” Nasscom said in a statement.
It, however, added a prolonged shutdown may delay some services such as visa processing.
“If the shutdown continues for an extended period, there will be an overall macroeconomic impact that may affect the industry. Some services such as visa processing time that depend on federal budgets are expected to see delays,” it said.
The U.S. government shutdown on Wednesday—for the first time in nearly 18 years—as the Republican and the Democrats failed to strike a deal on spending and budget mainly due to their differences over 'Obamacare'. Nasscom said, “The next steps to resolve the stalemate remain unclear at this point in time, and could take time. The earlier shutdowns in 1995 and 1996 lasted a total of 28 days.”
Meanwhile, engineering exporters are apprehensive of a slowdown in exports in the face of the partial shutdown , according to e Chairman of EEPC India (formerly Engineering Export Promotion Council) Anupam Shah .
While overall exports are likely to slow down, Indian engineering exports to the U.S. may be seriously affected as the U.S. accounts for 11 per cent of India’s engineering exports.
“The impact may be felt due to lower spending in the U.S. economy, as well as slower cargo clearance at the ports (due to lesser Federal staff) which may attract demurrage charges,” he said.
Exports to the U.S. clocked a negative rate of 4.19 per cent between April and August 2013.