Tuesday, February 28, 2017

Countering H1B norms tightening an option

The looming threat to Indian information technology (IT) firms in the form of the new US administration tightening its H1B visa rules could possibly be countered by the Indian government “in kind” if the need arises, government officials said, adding that the Centre could consider the option of reciprocating by stiffening conditions for American companies operating here. “India First and America First can work together, they can complement each other,” a senior government official said, referring to US President Donald Trump's rhetoric on protection of local jobs in the North American country. “Among leading Indian IT companies are American companies that are working in India. A collective call will have to be taken for (a response to the US increasing visa restrictions). As I see it, American companies themselves will pressurise them,” the official said.

India's foreign secretary S Jaishankar would visit the US on Tuesday and could discuss India's concerns about the possible clampdown on H1B visa programme with his counterparts in Washington DC. Several government representatives have earlier said that India was engaged with the Trump administration as well as members of the US Congress on concerns regarding the H1B visa issue, adding that New Delhi’s view was that Indian IT companies were contributing to the American economy by increasing the competitiveness of their firms. Earlier this month, an eight-member led by US Congressman Bob Goodlatte, chairman of the House Judiciary Committee, visited India, and discussed the issue with several ministers.

A private member’s Bill was introduced in the US Congress last month, which proposed to double the minimum wages of H1B visa holders, which could in turn significantly increase costs for IT companies. A delegation led by Indian IT industry body Nasscom will also visit the US to urge to their lawmakers and corporations to urge the administration to not let the crackdown happen. “We will wait for the Nasscom delegation's visit to happen. If that does not yield any result, the government will step in,” the official cited above said.

The US market accounts for over 60 per cent of the Indian IT sector exports, and any clampdown in the visa regime is expected to result in higher costs and shortage of skilled workers for the $110 billion Indian outsourcing industry. However, it will not be the first time that such a responsive move could be in the offing between the two countries when it comes to exports. Back in 2007, the US received its first batch of mangoes from India in nearly two decades. The mango imports from India were opened up reportedly after the government allowed shipping of American manufactured motorcycles into the country. Till 2007, India had not specified any emission standards for motorcycles with engine capacity above a certain threshold, which effectively meant that the two-wheeler vehicles of certain manufacturers were not allowed in the country.

Notwithstanding potential restrictions by the government on American companies operating in India as a response to US tightening its visa rules, chief economic advisor Arvind Subramanian, at the Express Adda event organised last week, said that the “notion that somehow we can grow rapidly based on our domestic markets and therefore this is an opportunity, just flies in the face of all the historical evidence”. In the rapid phase of India's exports, the notion that it would somehow be a boon if the world went protectionist is complete nonsense,” he added.

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