Immigration reforms may be dead for now, but study warns of dire consequences for India’s IT industry

India-US relations will sour: ICRIER study.

By Deepak Chitnis

WASHINGTON, DC: A report released by the Indian Council for Research on International Economic Relations (ICRIER) claims that if the US passes its controversial immigration reform bill, it will severely undermine the already turbulent relationship between the US and India.

The report, released on Tuesday, cautioned that passage of the US bill would be seen as an offense by the Indian government, and would sour the ties between the two democracies.

“The US immigration reforms reflect a host of unsubstantiated biases, protectionist instincts and personal agendas of lawmakers that nullify some of the gains of the Senate bill with regard to non-immigrant visas,” said the report.

The US Senate passed the immigration reform bill in the summer of 2013, when it was known as the “Gang of Eight” for the eight key legislators who backed the legislation. Subsequently, however, it stalled in the House of Representatives, with Republicans demanding several changes that Democrats have been unwilling to budge on.

The bill calls for prohibitively high fees, which it will levy on companies seeking to petition for H-1B and L-1 worker visas. IT companies that hire many workers from overseas, particularly India, say that these fines are unfair, and a persecution against those that hire foreign workers even though they may be better trained for a particular job.

Several industry giants, such as IBM and Infosys, hire thousands of foreign workers. Some large companies have even come under investigation for engaging in visa fraud to bring over so many foreign workers, while others, such as Oracle, have been sued for simply bringing in Indian employees because they’re cheaper.

India has already spoken out against the bill several times, saying that by discouraging foreigners from being hired, the US will deal a severe blow to India’s $118 billion IT sector. A study by JP Morgan estimates that the direct loss to India, if the bill were passed in its current version, would be around $2.6 billion, with a further $0.6 billion in indirect losses. The National Association of Software and Services Companies (NASSCOM), a software lobbying firm, estimates that the bill would set the US-based IT industry back by about $45 billion.

As things currently stand, however, the bill is no danger of passage anytime soon. Movement on the immigration reform bill has practically flat-lined over the past couple of months, despite overtures from both sides of the aisle that Congress was adamant to get it passed by the end of 2014. Now, with the political schedule dominated by the midterm elections, Obamacare, and foreign policy concerns, the issue of immigration has taken a backseat.

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