US Border Security Bill Targets India

There is nothing wrong with a country wanting to protect its borders for
preventing illegal immigration, or even unusual, especially if that happens to
have an estimated 11 mn illegal immigrants. Considering that this has been a
serious political issue, the signing of a new billnow officially called
Emergency Border Security Supplemental Appropriations Act, 2010by President
Obamathat allocates $600 mn towards creating some 1,500 new patrol agent
positions, custom inspectors and other enforcement officialswould normally not
be of concern to another country. Especially one which has got little to do with
this.

Yet, it is the biggest issue now with the Indian IT exports industry. And it
is the planned source of that funding that has made Indians worried. The
government plans to get the $600 mn by steeply raising the fees for certain H1-B
and L-1 visasthe platform on which the global IT services stand. Of the
estimated $550 mn that the government plans to raise from this, as much as $250
mn is expected to come from Indian IT services companies.

Naturally, industry association Nasscom has come out very strongly against
the bill, calling it anti-competitive. But is it really anti-Indian? If anyone
had any doubt, senator Charles Schumer, who sponsored the bill, put it to rest
by accompanying it with anti-offshoring and even anti-India rhetoric. First, he
called companies like Infosys Chop Shops. And later corrected himself to say
he meant body shops! It was one populism stone trying to kill two birds.

"The Indian IT industry, while recognized as a success story, is a fraction
of the US technology business and it is shocking that the Senator chose to blame
this sector for all generic issues of the USincreasing unemployment, lower
wages, and students not taking up technology education," said Som Mittal,
President of Nasscom. He said the action is discriminatory in nature. This
comment came as a reaction after lawmakers insisted that in the current economic
environment, imposing the taxes and fees on foreign workers and companies was
the best way to raise the money needed to address two of the countrys most
pressing issues: unemployment and illegal immigration.

The question is of blocking free trade by raising barriers. "While the full
impact of the US Border Security Bill is yet to be assessed, we think that it
goes against the notion of free trade and is discriminatory in nature. The
current US administration has been a vocal supporter of globalization, however
this move clearly puts barriers to trade and will also adversely impact talent
flow into the US which we think will have greater economic repercussions," says
Pratik Kumar, president, infrastructure engineering division and executive vice
president, HR, Wipro

India Tech in a Fix

High-tech companies will suffer the burden in financing the bill because
several skilled Indian workers use the special visas to work for clients in the
United States, while US based firms that issue the same visas typically will not
face the higher fees. Indian firms such as Infosys, TCS, Wipro, and many others
already avail H-1B and L-1 visas to fly their employees to US as on-site
engineers. As per Nasscoms estimates, Indian companies (mostly IT) apply for
50,000 visas every year, including H1-B and L1 visas, besides renewal of old
visas.

While many believe that apart from raising the costs of outsourcing for
American companies, it may result in more jobs moving offshore. As the former
Prime Mininter of India, Atal Bihari Vajpayee said, "If people cannot come to
where jobs are, jobs will go to where people are." In effect, it would either
make the US companies uncompetitive in global markets or will take the
outsourcing economy to countries like India, far more than it is doing today.

While diplomats and senior officials from the government are pressing on the
US to re-look at the hiked visa issue, experts and analysts believe that it
wont be an easy task for the Government of India as there are several
complexities associated with the world trade norms. Pain points actually lie in
the norms prescribed by the General Agreement on Trade in Services (GATS).
Experts further argue that India should start exploringe other options such as
lobbying through American companies that use services of Indian professionals
and also using bilateral forums to negotiate visa related issues for Indian
professionals. In the worst case scenario, experts maintain India could
retaliate by restricting movement of US businessmen and professionals to India.
By imposing high visa fees, the US is nullifying or impairing the benefit which
are available to Indian IT companies.

Earlier Indian Ambassador to the US Meera Shankar had already lodged an
official protest to the US Trade Representative Ambassador Ron Kirk in a letter
dated August 9, 2010, about five days before Obama signed the border security
bill into law, ignoring Indias concerns. The Indian Ambassador condemned the
fact that the amount for the security of US-Mexico border would be provided
through higher fees on H1-B and L visas from those applicants who employ fifty
and more people and 50% of whom are non-immigrants in H-1B or L visa categories.
Such a scenario would also impact the Indo-US ties in the time to come. Even
Union Commerce and Industry Minister Anand Sharma has written a letter to Kirk,
expressing his concerns about the issue of raising visa fees.

However, a recent PTI report from Washingtone DC says that the US is
reviewing the suggestion that the bill was not WTO compliant.

"Yes, we are reviewing a suggestion that this bill (border security bill) is
not WTO-compliant. I am not aware that weve reached any final judgement, but
were not sure that necessarily any WTO issues are triggered," the agency quoted
state department spokesman, PJ Crowley as saying.

If not resolved, it could impact the visit of President Obama to India as
planned for this November.

PC Suraj

surajp@cybermedia.co.in