Surbhi Prasad & Banikinkar Pattanayak
India is raising the issue of H-1B visa with some nations, seeking a change in the way they confuse such permits for the temporary movement of working professionals with the broader immigration issue, according to a top commerce ministry official. The move comes as tentacles of protectionism spread far and wide in developed countries such as the US, the UK, Australia and even Singapore, posing risks to India’s fast-growing services trade like never before.
Explaining India’s position on the H-1B visa issue, commerce secretary Rita Teaotia told FE: “We think some countries are confusing modes of supply in services trade — especially Mode 4 (temporary movement of skilled professionals) — with immigration. So, where we feel a country is mixing up the two, we are raising the issue.” “Immigration is a different thing and every country is entitled to formulate their own policy on it, but the movement of workers on specific assignment who go back once their job is done is a totally different issue. It’s an important element of services trade,” Teaotia added.
Last month, during the first round of talks between senior officials of India’s commerce and industry ministry and the US Trade Representative’s (USTR) office under the Donald Trump administration, India is learnt to have conveyed clearly that it perceives the tightening of the H-1B visa programme as a non-tariff barrier to services trade. Still, the differences persisted, as the US side continued to stress it was mainly an immigration issue.
Not just the US, even Australia announced tightening the temporary skilled migration visas last month. Its new visa system will allow foreign workers to stay for two years, instead of the current four, and reduces the number of skills that qualify for obtaining the visas. Besides, applicants will be required to have a higher standard of English and undergo a full police check — conditions that leave a lot of room for discretion that can be detrimental to India’s interest.
The Indian IT industry has also complained of visa tightening by Singapore, which now insists on an “economic needs test” that requires compliance with certain economic criteria. Some analysts see it as a violation of the bilateral Comprehensive Economic Cooperation Agreement by Singapore. In November last year, India had asked visiting UK Prime Minister Theresa May to offer a more liberalised visa regime, stressing any selective free trade arrangement, without making the movement of skilled professionals and students easier, was undesirable.
India’s latest concerns about the H-1B visa issues were reinforced after Trump issued an executive order late last month, which effectively raised the bar for foreign guest workers used by US and Indian companies to do work in the US.
The Indian IT industry has often complained it has been subjected to such anti-trade practices and that its contribution to the US economy is ignored by policy-makers there. According to a Nasscom report, Indian IT companies were providing more than 4 lakh jobs in the US, of which around 3 lakh were held by either US citizens or permanent residents. These companies also invested over $2 billion in the 2011-2013 period and paid as much as $22.5 billion in taxes to the US during those years.
Govt taking steps to boost export competitiveness
Amid concerns that the strengthening of the rupee may threaten a recent recovery in the country’s export growth, Teaotia said the real issue is how to improve the broader export competitiveness. She said: “Our job is to promote exports. So we do keep track of the movement of rupee as well, among other trade-influencing indicators. But the real issue is how to make domestic companies more competitive, and the government has been taking several steps in this direction.”
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The commerce secretary said measures like the ease of doing business and trade facilitation for trading across borders are geared towards making exports more competitive. “We are looking to banks to further lower interest rates for companies. The government has also brought in an interest equalisation scheme to support exporters. Focus and investment on infrastructure is also towards the objective of reducing logistic costs.”
Merchandise export growth jumped to a six-and-a-half-year high of 28% in March from a year before. With this, exports in the last fiscal grew 4.7% to $274.64 billion — a much-needed rise after two successive years of decline.