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It's Up To Modi To Help India Weather The Trump Maelstrom

The H1B visa reform has come as a shock.

03/02/2017 10:37 AM IST | Updated 07/02/2017 8:59 AM IST

Indian industry—especially the booming $130 billion IT-BPO (information technology-business process outsourcing) sector that employs 3.7 million people—came in for a shock as US President Donald Trump's unleashed a blitz of radical policies.

New Delhi was encouraged by Trump's previous pledges of an unshakeable friendship between the two countries, but finds these affirmations not squaring up with the agenda he is now unravelling.

Many US-based Indian professionals [have been unnerved] into considering returning home; the number of queries from them for jobs in India doubled over the last fortnight.

Indian Prime Minister Narendra Modi was among the first world leaders Trump telephoned within five days of his installation as President; during his election campaign he had declared to his Indian supporters and donors that he was "a big fan of Hindu [sic] and a big fan of India; big big fan, big big fan". He had added, "Let me start by saying right up front that if I'm elected President, the Indian and Hindu community will have a true friend in the White House and I can guarantee you that."

But late last month, Indian IT stocks on the national bourses tumbled 4%, wiping out ₹33,000 crore ($4.9billion) in market valuation of the top five firms, after the High-Skilled Integrity and Fairness Act of 2017, or the H-1B reform bill, was introduced in the House of Representatives. The bill legislates more than doubling the salary of an H-1B visa-holder from the present $60,000 to $130,000, which will compel employers to alter hiring practices, hitting hard the thriving Indian technology community in the US. It also calls for additional documentation for the applicants and stops the issuance of work permits to their spouses.

India is the world's largest provider of IT services, and over 60% of this business is accounted for by the US where some 350,000 Indian engineers work on H-1B visas with Indian as well as American tech companies.

Many of the 250,000 applicants for the 65,000 H-1B visa slots for financial year 2017 were from India and they also are the majority of the allottees. Similarly hamstrung will be many of the 165,000 Indian students, who comprise 16% of the total international student community in the US and contribute over $5 billion to the US economy, as they seek work opportunities there on completion of their higher education in STEM (science, technology, engineering and mathematics) courses.

The visa entitles a stay of a maximum of six years in the US. R. Chandrashekhar, president of the industry's representative body Nasscom, estimates that any rewriting of work visa rules to force cutbacks on outsourcing can cost Indian IT companies $400 million a year, apart from large-scale job loss. Pointing to the high-skilled IT solutions the Indian IT sector provides American businesses, he assures that Nasscom will engage with the US administration through the Indian government to highlight the industry's value contribution as a "net creator" of jobs in the US.

Also imperiled are India's pharmaceutical exports that had boomed in the six years of Obamacare.

Indeed, during his campaign and after, Trump has lauded the 3.8 million-strong Indian diaspora in the US for its talents and hard work. In his phone call, he also invited Modi to visit the US, and it is likely the Prime Minister will make his state visit by April. Such an early meeting would no doubt sustain the momentum in bilateral relations. The Prime Minister tweeted following the phone call that he too had extended an invitation to Trump to visit India. "Had a warm conversation with President Trump," he added. "President and I agreed to work closely in the coming days to further strengthen our bilateral ties."

On his part, Trump has appointed as many as six Indian-Americans to his administration, including his one-time fierce critic and first woman Indian-American Governor of a US state (of South Carolina), Nikki Haley. Her appointment as the US Ambassador to the United Nations makes her the first ever Indian-American to serve at the cabinet level in any US administration.

The other five appointees are Uttam Dhillon, appointed special assistant to the President where he will be part of the legal team led by White House Counsel Donald McGahn, Seema Verma (head of Medicaid and Medicare Services), Ajit Pai (head of Federal Communications Commission), Preet Bharara (US attorney for the southern district of New York, with jurisdiction over Wall Street), and Raj Shah, who is part of the White House Communications Team.

The President has also lent his brand to five luxury high-rises coming up in India at a cost of $1.5 billion and representing possibly the maximum number of such real estate projects of his outside of North America. There are indications of three more projects in India this year involving investing equity. In fact, among those the President chose to meet within days of his win were three Indian property developers who were building the five high-rises.

Despite their mutual exuberance, both Modi and Trump will have a weighty agenda before them when they meet in Washington.

At the same time, Trump's nationalist and protectionist rhetoric driving his "America First" vision is unnerving many US-based Indian professionals and making them consider returning home; the number of queries from them for jobs in India doubled over the last fortnight. Many of them are at the level of project managers and above who are awaiting an H-1B visa extension after completing three years in the US.

New Delhi also fears that American companies operating in India—whose tax payouts in the country equal their parent entities' in the US—will be motivated to return home if Trump delivers on his promise to reduce corporate taxes in the US to 15% from 35%. Also imperiled are India's pharmaceutical exports that had boomed in the six years of Obamacare. Indian pharma majors had exported $66 billion worth of generics since 2010 when the federal statute was enacted and which Trump wishes to rescind.

Though Trump's overtures to India indicate an intent to sustain and strengthen the strategic partnership the two countries enjoy, New Delhi awaits firmer indications. It is evident that despite their mutual exuberance, both Modi and Trump will have a weighty agenda before them when they meet in Washington.

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