Short-sighted hike in U.S. visa fee

Updated - November 17, 2021 03:09 am IST

Published - December 30, 2015 12:50 am IST

The Barack Obama administration’s decision to raise the visa fee for skilled professionals seeking temporary work in the U.S. is set to hit Indian companies in the IT sector. Nasscom, the trade association, puts the expected losses at about $400 million a year. The development comes in the run-up to the 2016 presidential elections when fear-mongering about American jobs ‘going to foreigners’ inevitably becomes part of the political rhetoric. The $1.8-trillion tax and spending bill, which authorises the doubling of the fee for certain categories of H1B and L1 visas to $4,000 and $4,500, respectively, and was signed into law by Mr. Obama, has raised concerns in India. Just as capital-surplus countries pitch for easier entry for their capital, India — with over 65 per cent of its 1.25 billion people below the age of 35 — makes the case for free labour movement. Although India has the options to take retaliatory steps or move the World Trade Organisation’s dispute settlement panel, the best course would be to amicably resolve the issue at the diplomatic level. To successfully challenge the increase before a WTO panel, India will have to prove the discriminatory nature of the fee hike on Indian firms vis-à-vis their competitors from other countries. That is challenging since some Indian IT majors such as Infosys have said the American move will not impact the sector much. Taking tit-for-tat steps would mean killing the goal of boosting bilateral trade from $100 billion today to $500 billion in the next few years.

American and Indian policymakers need to focus on the larger picture. Just as a labour-surplus India, a nation with high poverty levels (with almost 300 million people, close to the entire population of the U.S., living on $1 a day), will need to gradually ease restrictions on capital inflows, a capital-rich U.S. with a looming labour shortage (due to the growing retiree population) will have to look at removing curbs on labour mobility sooner than later. U.S. authorities and lawmakers must also realise that their own corporations trust Indian IT service providers not just for their quoted rates but for their ability to get the job done. More importantly, as a Nasscom report of September 2015 points out, India-based IT companies providing services to American businesses and other customers invested over $2 billion between 2011 and 2013, and paid $22.5 billion in taxes to the U.S. Treasury in those years; in fact, they supported more than 411,000 direct and indirect jobs in the U.S., including 300,000 held by U.S. citizens and permanent residents. In this period, over 120,000 Americans benefited from philanthropic activities by Indian IT companies, which focussed on educating more Americans in science, technology, engineering and mathematics (STEM) skills. Such contributions apart, the U.S. must absorb the larger point it often makes to others: a globalising world seeks greater interdependence, and not higher walls.

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