India will press the US to drop contentious provisions in its Immigration Bill, which stand to hit Indian IT companies operating in the country, during Prime Minister Narendra Modi’s visit to Washington in September.

Commerce Minister Nirmala Sitharaman will also take up the matter with US Trade Representative Ron Kirk in the joint trade policy forum meeting in October.

Rising restrictions

US Secretary of State John Kerry recently indicated that some changes could be made in the Immigration Bill awaiting clearance in the US House of Representatives, but New Delhi is not satisfied with mere words.

“Over the past few years, restrictions on Indian IT companies have been rising in the US. Things will get much worse if the Immigration Bill gets implemented in its current form as operating costs will go up significantly. We cannot afford to be satisfied with mere assurances and need to continue to raise the issue in all bilateral forums till our concerns are met,” a Government official told BusinessLine .

The Immigration Bill places restrictions on IT companies on hiring workers on H-1B visas. This means that Indian IT companies will be forced to reduce Indians employed by them in their US offices to half of the work force. They will have to hire Americans who demand much higher pay packets than their Indian counterparts.

Moreover, they would also have to pay workers minimum wage levels prescribed in the Bill. A study by global consultants J P Morgan carried out last year when the Immigration Bill was passed by the US Senate estimated losses of $2.6 billion to India’s IT sector if it got implemented without changes. All Indian IT companies operating in the US such as Infosys, HCL Technologies and Wipro will be hit.

Indian IT Industry representative body Nasscom, which has been lobbying with members of the US Congress to remove the harmful provisions, believes that the Bill will create negative repercussions in a number of ways. “The increase in visa fees and enhanced audits and labour market test requirements and outplacement of H-1B or L1 workers will act as serious hindrances in exchanging valuable resources between the two countries,” Gagan Sabharwal, Director-Global Trade Development, Nasscom, said.

Higher costs

It is not just the Indian IT industry, but US businesses that rely on the services of such companies will also get affected, argues Nasscom. “Inevitably, these punitive fees and other costs added by the Senate Bill would mean higher costs for the thousands of American businesses and other institutions who use these IT services. It is likely to slow down investments in the US, the direct and indirect jobs that their services support, and the tax revenues that global services providers pay to federal, state and local governments,” Sabharwal said.

While the previous UPA Government, which too tried to convince the US to change provisions in the Bill, met with little success, it is to be seen whether the Modi Government has better luck.

“When the PM meets US President Barack Obama, he is likely to raise the Immigration Bill issue emphatically.

“Commerce Minister Nirmala Sitharaman, in her meeting with the US Trade Representative Ron Kirk the following month, will also place the matter on top of her agenda,” the official said.

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