Visa curbs to hit US companies in India, cautions Sitharaman
Apr 21 2017 , New Delhi
She was, however, non-committal on dragging these countries to the World Trade Organzation (WTO). “At this stage, we will engage constructively. At the same time, India will ensure that it will not accept unfair treatment,” she told reporters when asked whether India would move the multilateral trade body against the US and Australia. “So it is not an unilateral (issue), where Indian companies would have to face this, there are several US companies in India which are doing business for years here,” she said. The restrictive visa regime would also impact the US companies that are operating in India, she added.
On the new executive order signed by US president Donald Trump, which seeks to prioritise H1B visa for the most skilled and the highest paid, Sitharaman said America has committed a certain number of these visas to India and “we would definitely want the US to honour that commitment.”
Pointing out that it is not just the US, but several other countries are now adopting such measures, she said the government and the industry needed to work together on the issue.
The commerce minister said that India would actively pursue the proposal in WTO, seeking an agreement on trade facilitation in services. Citing the examples of the US, the UK, Australia and New Zealand, which have tightened their visa regime for movement of skilled professionals, she said: “Countries are now very clearly raising protectionist walls as regards service trade. And it is time that we have a global framework within which trade in services can happen.”
The trade facilitation agreement in services proposal is aimed at liberalising rules for movement of professionals and other steps to reduce transaction costs to boost growth of the services sector. Services sector contributes over 60 per cent to India’s GDP and 28 per cent of total employment. The move is aimed at developing a broader framework governing global services trade, just like the pact implemented by WTO on goods.
Sitharaman said India wants all the member nations to study the proposal before the forthcoming ministerial meeting of WTO in December in Argentina. Indian IT firms use temporary work visas to send staff to work on client sites. With visa programmes in these countries becoming more rigorous, domestic technology firms will face challenges in movement of skilled professionals and a spike in their operational costs.
These companies get about 60 per cent of their revenues from the US market, about 20 per cent each from Europe and other countries put together. With the rising protectionism across markets like the US, the UK, Singapore and Australia, domestic companies are beginning to adjust their business models to reduce their dependence on visas by hiring more locals.
The US, under a new executive order, proposes to replace the current lottery system for issuing H1B work visas with a merit-based approach. It is reviewing its visa programme for foreign workers to also curb abuse and frauds related to visas. Similarly, Australia has abolished a work visa programme —457 visa —used by over 95,000 temporary foreign workers, majority of them Indians, to tackle the growing unemployment in the country.
New Zealand, too, is introducing tougher norms for immigrant workers. One of the changes will need immigrants to get a job in which they earn at least the median income to qualify as skilled.