Hike in visa fees to figure in US-India talks

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New Delhi | Published: August 15, 2016 7:09:57 AM

India and the US will on August 30 hold the crucial strategic and commercial dialogue (SCD), in which New Delhi will voice its concerns over a sharp hike in H-1B visa fees, an elusive totalisation agreement and Washington’s growing “protectionism” in services, reports Banikinkar Pattanayak in New Delhi.

US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker will visit India for the meeting, official sources told FE. (Reuters)US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker will visit India for the meeting, official sources told FE. (Reuters)

India and the US will on August 30 hold the crucial strategic and commercial dialogue (SCD), in which New Delhi will voice its concerns over a sharp hike in H-1B visa fees, an elusive totalisation agreement and Washington’s growing “protectionism” in services, reports Banikinkar Pattanayak in New Delhi.

US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker will visit India for the meeting, official sources told FE. The Indian side will be represented by external affairs minister Sushma Swaraj and commerce
and industry minister Nirmala Sitharaman.

India will try to impress upon the US to sign a totalisation agreement to exempt the IT industry from mandatory payments for social security of their Indian employees in the US, said a source. IT companies are paying around $1 billion a year to comply with social security norms for their Indian employees in the US despite the fact that they don’t live there long enough to be eligible for such benefits.

For its part, the US is expected to raise concerns about the intellectual property rights (IPR) regime in India. Ease of doing business, greater involvement of US companies in India’s Smart City mission and enhanced cooperation in critical areas of infrastructure and energy will also be among the focus areas. Some of these issues could be part of the recommendations by the US-India CEO Forum to take the partnership forward. India and the US held the first such SCD on September 22 last year.

On the visa issue, India is gearing up to challenge the US at the dispute settlement body (DSB) of the World Trade Organisation. The US move to drastically hike the H-1B and L-1 visa charges is estimated to quadruple the Indian IT industry’s annual visa costs to $400 million. It may be mentioned that two US lawmakers last month had introduced in the House of Representative a piece of legislation which, if approved by the Congress, will prevent Indian companies from recruiting IT professionals on H1B and L1 work visas in the US.

Although the US claims that its decision to hike the visa fees isn’t country-specific, trade analysts say the move is cleverly tailor made to target the Indian IT industry. This is because India is a major user of such temporary work visas for skilled professionals, making up for roughly 67% of H1-B visas and 28% of L-1 visas in 2013-14.

Analysts said the US side will seek greater commitment from India on IPR. Last month, a report of the Bureau of Economic and Business Affairs of the US Department of State said: “Prime Minister Modi’s courtship of multinationals to invest and ‘Make in India’ has not yet addressed long-standing hesitations over India’s lack of effective IPR enforcement.”

As such, the US has retained India on its priority watch list in its annual Special 301 report. India, however, has maintained that its IPR regime is fully WTO-compliant and that the 301 report on IPR is a “unilateral” move by the US.

Despite increasing diplomatic cooperation, both India and the US have been engaged in challenging each other at the WTO on various trade disputes.

In 2014, the US had dragged India to the dispute settlement body against its National Solar Mission that favoured the use of locally manufactured solar equipment and managed to get a ruling against India.

In March 2012, the US had approached the WTO against India’s ban on import of various agriculture products including poultry meat and eggs from the US. In this case too, the DSB had ruled in favour of the US.

The increasing instances of India’s trading partners successfully making greater use of the multilateral dispute resolution framework has prompted the country to resort to the same strategy.

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