Taking a strong stand against protectionist measures taken by the US administration, Electronics and Computer Software Export Promotion Council (ESC) today said American companies should not be allowed to participate in Indian e-governance projects.

"Presently the major beneficiaries of the e-governance projects outsourced by the Union and state governments are US companies like Microsoft, IBM and Oracle," ESC said in a statement.

ESC added that such restrictions from the Indian side will immensely benefit Indian ICT firms, particularly those in the small and medium enterprises (SMEs) sector.

The state of Ohio has banned outsourcing of government information technology and back-office projects to locations such as India.

"The adverse impact on SMEs on account of the ban is more severe and if the situation is allowed to drift, it would also result in wiping out of the SME sector in India," ESC Executive Director D K Sareen said.

He urged the Union Commerce Minister to impress upon their counterparts that protectionist measures will not help in the development of bilateral trade and investment.

"There should be expressed provisions in the e-governance contracts that certain percentage of business should be earmarked for the SMEs and this should be implemented in letter and spirit," ESC said.

ESC said it was a misconception that outsourcing is a zero sum game for the US corporations.

"The truth is that USD 30 billion export of software and related exports to the US has benefited the country in as much terms as India has gained," ESC said.