India will take up the IT industry’s concerns regarding curbs on the non-immigrant temporary work visas as well as the absence of a bilateral social security pact, once the U.S. President elect Donald Trump takes charge in mid-January 2017, Commerce Minister Nirmala Sitharaman said on Thursday.
“We will continue our negotiations … At the earliest available moment, we will brief (the Trump administration) about the Indian (IT) industry’s contribution to the US economy. We hope the new President will deal with the issues in a fair manner,” Sitharaman told correspondents. She was responding to a question on the impact of Mr. Trump’s promises, among other things, to put an end to outsourcing business and take steps to curb immigration.
Meanwhile, the U.S.-India Business Council (USIBC) in a statement said the Trump administration must expedite talks on the proposed India-US Bilateral Investment Treaty.
USIBC President Mukesh Aghi stated that according to the USIBC’s more than 350 member companies, both American and Indian, the Trump administration must support India’s admission into the Asia Pacific Economic Cooperation Forum, work to boost defence trade with India and engage with the Indian government to enhance Intellectual Property protection in India.
The USIBC said the U.S. should also take up market access barriers faced by American companies in India. This includes tariff increases on the importation of Information & Communications Technology products, foreign direct investment (FDI) barriers in insurance – especially with respect to ownership and control, inequitable FDI restriction in tobacco, and price controls in the pharmaceutical and medical device industry.
Unfair tax The members of the USIBC — an advocacy organisation for boosting economic and commercial ties between both the nations —also wanted the government led by Mr. Trump “to eliminate outdated and unfair tax for Indian workers by concluding an executive agreement with India on social security (totalisation agreement).”
The USIBC said around “five lakh U.S.-based Indian workers pay the 6.2 per cent Federal Insurance Contributions Act payroll tax on an ongoing basis. Despite their contributions, which add up to $1 billion per year, they will never receive the benefits because they return to India before they have worked at least 40 quarters (approximately 10 years).”
Following the Obama administration’s move to hike fees for H1-B and L-1 visas (employment-based non-immigrant visas used mostly by the Indian IT sector for moving skilled workers to the US for short-duration work), industry body Nasscom had said the move will result in the IT sector taking a hit of over $400 million annually.
India has already dragged the US to the WTO dispute settlement body on the issue saying the visa fee hike is “discriminatory” against Indian firms and that the move appears to be inconsistent with the US commitments under the WTO’s General Agreement on Trade in Services.
Pragmatic reforms According to the USIBC, “the issue regarding the free movement of high-skilled workers disrupts the U.S.-India bilateral relationship unlike any other, and it can be fixed with pragmatic reforms.”
Terming the December 2015 (US) Omnibus Appropriations law’s so-called 50:50 fees (making 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 H1B and L1 visas) as “clearly discriminatory”, the USIBC said it should be eliminated by the U.S. Congress. “We would welcome your (Mr. Trump’s) efforts to advocate for the same with the U.S. Congress,” the USIBC added.
According to a Nasscom report in September 2015, Indian IT firms -- providing services to US businesses and other customers – had between 2011-2013 invested over $2 billion, paid $22.5 billion in taxes to the US Treasury, and supported more than 411,000 direct and indirect jobs in the US, and these jobs included 300,000 held by US citizens and permanent residents. Also, over 120,000 Americans benefited from the Indian IT companies’ philanthropic activities during 2011-2013, the report had said.
