New Delhi: India should take the lead to bring legal restrictions placed on outsourcing under the framework of multi-lateral trade negotiations, according to a draft report by the United Nations Conference on Trade and Development (UNCTAD).

The international body in its preliminary findings has suggested, "India should take the initiative to see that legal restrictions placed on outsourcing (for example the New Jersey Bill) are brought within the coverage of GATS (General Agreement on Trade in Services)."

A number of US State legislatures have taken steps to curb the outflow of such services to overseas destinations, including Michigan and Washington.

The report says that the services have the potential to lift India out of poverty just as the phenomenal growth in manufacturing in China has reduced the incidence of poverty there sharply.

It points out that contrary to public perception that services provide employment for highly skilled, some calculations have revealed nearly two-thirds of employment in the services sector may consist of low skilled or medium skilled people pointing to their high potential for poverty alleviation in India.

"By directly employing both skilled and unskilled personnel, its poverty alleviation effects are very high and of even greater importance are the indirect effects through remittances, which are real injections into the economy and have multiplier growth effects," it said.

It further said liberalisation in movement of service suppliers could be of extreme importance to India given its vast reservoir of qualified and trained personnel.