The first round of talks between officials of India’s commerce and industry ministry and the US Trade Representative’s (USTR) office, under the Donald Trump administration, this week saw both the sides willing to continue with the working groups and build on bilateral ties, but seemed to have differed over the vexed issue of the H1-B visa programmes for working professionals. While India treats the tightening of the visa programme by the US as a non-tariff barrier to services trade, the US continues to consider it mainly an immigration issue. This means the issue will linger on. While assistant USTR Mark Linscott headed the US delegation for the talks on April 18, the Indian side was led by additional secretary in the commerce ministry, Anup Wadhawan.
The four working groups relate to agriculture, goods and services, intellectual property rights and investment and manufacturing. India’s concerns about the H1-B visa issues were reinforced after US President Trump issued an executive order on Tuesday, ostensibly aimed at curtailing the alleged misuse of guest workers visa and promoting the “Buy American and Hire American” policy. The order effectively raises the bar for foreign guest workers used by US and Indian companies to do work in the US.
Sources, however, said that the new order, though against the spirit of free services trade, is unlikely to affect big Indian IT companies having huge presence in the US. This is because the order does not impose any moratorium on guest worker visas that Trump had pitched for during the campaign, called for during his presidential campaign, but called for an overhaul of the lottery system used to determine the metrics on which H-1B visas are sponsored to prevent abuse by body-shopping companies. As such, most of the Indian IT companies depute senior executives to the US, and not entry-level and poorly-qualified people. Indians make up for over 60% of the 85,000 such visas every year.
While no new changes are being implemented immediately, Trump’s executive order directs the federal bureaucracy to enforce visa law more vigorously, and to study new ways to reform and restrict the H-1B system. Nothing is being proposed that would impact or change the FY18 H-1B lottery that is currently underway, according to IT industry body Nasscom. The proposed changes are forward-looking and non-specific. While extending support to root out any abuses in the H1-B system, NASSCOM, however, said: “In general, we believe that the current campaign to discredit our sector is driven by persistent myths, such as the ideas that H-1B visa holders are ‘cheap labour’ and ‘displace American workers who train their replacements’, none of which is accurate.
The fundamental issue is the shortage of highly-skilled domestic talent in the US, in IT, healthcare, education, and other fields.” 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 policymakers there. According to a Nasscom report released in September last year, 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 a staggering $22.5 billion in taxes to the US during those years.