Indian IT companies face $400 million hit annually.
AB Wire
The Indian government, facing the prospect of their IT companies taking a hit of around $400 million annually in the wake of visa fee hikes imposed by the US, is planning to take the US to the World Trade Organization’s dispute settlement body, if talks to resolve the issue is not settled amicably.
Industry bodies FICCI and Nasscom had termed America’s decision — to double the fees for certain categories of H-1B and L1 visas to $4,000 and $4,500, respectively — as “discriminatory” because it will mainly impact Indian IT firms. Nasscom said the decision’s financial implications for the Indian technology sector would be around $400 million a year, reported the Hindu.
H1B and L1 visas are temporary work visas for skilled professionals. India is the largest user of H1B visas (67.4 per cent of the total 161,369 H1B visas issued in FY14 went to Indians) and is also among the largest users of L1 visas (Indians received 28.2 per cent of the 71,513 L1 visas issued in FY14).
President Barack Obama had recently signed into law a $1.8-trillion tax and spending Bill. Among other things, it authorized the visa fee hike applicable to companies employing 50 or more, and with over 50 per cent of their employees in the U.S. on H-1B and L1 visas.
The money raised is likely to be over $1 billion every year, and will be utilized to finance a biometric tracking system and healthcare requirements of the 9/11 terror attack victims, the Hindu report said. The firms mostly affected by the 50/50 rule are those from the IT/ITeS sector, the largest users of the H-1B and L1 visas. However, trade experts, speaking on condition of anonymity, said that to successfully challenge the fee increase before the WTO panel, India will have to first establish how Indian companies are more affected than those from other countries.
Discussions on the issue will be held shortly over digital videoconference between both governments, the Hindu reprt said. These discussions will be part of the high-level India-US Services Working Group meetings, the sources said.
Commerce Minister Nirmala Sitharaman is likely soon to write to U.S. Commerce Secretary Penny Pritzker. The sources said the Indian Ambassador to the U.S. and industry bodies such as Nasscom are in touch with the U.S. administration to put across India’s view — the “huge” contribution of the Indian IT firms to the U.S. economy, as well as the adverse impact of the visa fee increase on these firms and on the temporary movement of highly-skilled professionals, mainly from the IT sector, from India to the U.S.
Pointing out that U.S. visa fee increases hurt India-US services trade, the Indian Commerce Ministry has been insisting that all visa-related issues should be part of discussions on bilateral services trade, the India-US Trade Policy Forum (or TPF, the premier bilateral platform to discuss and resolve bilateral trade and investment issues) and the India-US Strategic and Commercial Dialogue (S&CD, the primary forum to discuss issues of mutual interest on regional security, trade, economic cooperation, defence and climate challenges).
During 2014-15, India’s export of computer services and ITES/BPO services (excluding commercial presence) was around $82 billion, of which exports to the U.S. and Canada accounted for nearly 60 per cent.
The sources said, according to the Hindu, U.S. Commerce Department and the U.S. Trade Representative have informed that visa-related matters should be kept out of the TPF, S&CD and services discussions as, according to the U.S., they are security-related issues dealt by the Department of State and Department of Homeland Security.
The report pointed out that India had earlier protested the delay by the US in signing a totalization agreement to eliminate dual social security taxation. The Indian IT/ITeS sector is already burdened because in the absence of an India-U.S. Totalization Agreement, it has to shell out over $1 billion annually to the U.S. government towards social security, with no benefit (as the Indian employees do not stay on in America) or prospects of refund.
4 Comments
Let’s start with India doesn’t have IT companies. They have temp labor shops that offer lower cost labor. The US visa program isnt a ‘market’ or a ‘trade’ and was never intended to benefit India’s financial interests in any way. So yes, please, let’s go to the WTO and let them explain it to India since they can’t seem to grasp the concept themselves. The alarmist drama is entertaining though…
American companies suffer and even go out of business when American laws, taxes and fees change in ways that affect them negatively. Why should Indian companies be promised a profitable climate when American companies are not? Grow up India.
I hope that President Trump sends all of you people back to goatropeistan.
The WTO is a globalist conspiracy to destroy the American Middle Class.
Go Home!
Get well soon!