President Barack Obama today underlined his determination to end tax loopholes that encourages incentives for investment in overseas jobs, saying he will provide a generous tax credit to companies that create more jobs in the US.

Amid indication that outsourcing could become a hot issue in the November elections, Obama said that the tax breaks should go to companies that create jobs in the US and not overseas.

"One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries,? Obama said in his speech on economy at Cleveland, Ohio.

The president said he was determined to change that.

"I want to change that. Instead of tax loopholes that incentivize investment in overseas jobs, I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America," Obama said with Ohio Governor Ted Strickland standing by his side.

"I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America -- not those that create jobs overseas. That's one difference between the Republican vision and the Democratic vision. And that's what this election is all about," Obama said.

Running behind in opinion polls, Strickland of Democratic party, who till now was going out of his way to woo Indian companies, last week passed an executive order that banned outsourcing, arguing that this undermines economic development and has unacceptable business consequences.

"Outsourcing jobs does not reflect Ohio values," Strickland said in a statement after he signed the executive order.

Reacting to the order, the Indian IT sector, which gets 60 per cent of its export revenue from the US, termed the move as discriminatory and said it amounts to a trade barrier.

The move, which comes ahead of Obama's visit to India in November, follows a controversial legislation that increased H-1B and L1 visa fees, hitting India's over USD 50 billion IT industry.

The Indian industry will take up the issue with its US counterparts and seek government's support to flag it with the American authorities.

"Nasscom is leading a delegation to the US later this month and will be taking this up with relevant officials in the US," the apex body of the IT and ITES industry said in New Delhi.

Obama said his proposal will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines and start putting their profits to work in places like Cleveland and Toledo and Dayton. .