The Electronics and Computer Software Export Promotion Council on Tuesday hailed the proposal in the Interim Budget to abolish tax on business process outsourcing and said it will attract many overseas corporates to set up operations in India.

The proposal to abolish the tax on BPO has come at a time when the United States administration has passed a legislation banning the US vendors from outsourcing the government works to countries like India, D K Sareen, executive director, ESC said in a statement in New Delhi.

He said the US administration had also been toying with the idea of granting some tax breaks to the US companies for not outsourcing their works and this measure would motivate some corporates, particularly from the US to set up their subsidiaries in India and carry on with the BPO.

He said the concessional finance measures announced in the Interim Budget would help computer hardware and software firms in India.