Corporate India on Wednesday expressed disappointment at United States decision to deny tax breaks to American companies that outsource work to low-cost destinations and said the measure reeked of protectionism.

US President Barack Obama announced the measure during his address to the Joint Session of the US Congress on Tuesday.

"The US companies will have to weigh the cost of losing tax benefits against the efficiency gains, competitiveness gains and take a decision. We expect that the US companies will choose a long-term efficiency route and continue to outsource on balance," Ficci's Secretary General Amit Mitra said.

Obama had said: "We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas."

PHD Chamber President Satish Bagrodia said, "Now, it appears that the US is taking the lead in protectionism, which is against globalisation. This trend will be followed by all over the world and will support inefficient industries and efficiency will take a beating."

India's services industry contributes over 51 per cent of the country's GDP, with IT and IT-enabled Services segment accounting for 10 per cent of the sector's output.