- Home
- About
- Globally Speaking
- Videos
- Podcast
- Geopolitics
- Industry
- SIGN UP
Donald Trump's ambivalence on economic and strategic issues concerning India is coming in the way of taking bilateral ties to the next level. If India and the US were Facebook friends, then many in the Indian establishment would be justified in describing the relationship as “It's complicated.” India is a “major defence ally” of the US, the economic relationship is vibrant, at least on the face of it, Washington has reiterated its support for India to be admitted into the Nuclear Suppliers' Group (NSG) as a full member and public statements by senior government officials on both sides continue to exude warmth. But eight months into the Donald Trump presidency, there is still a certain ambiguity on where New Delhi stands in the US President's scheme of things. On the campaign trail, Trump did promise that if he were elected to the highest US office, India would have a true friend in the White House. He reiterated his statement and promised to redeem his pledge when Prime Minister Narendra Modi visited Washington earlier this year. But concerns remain. Uncertainty over trade In a sign that there are niggles in the apparently close ties between the two countries, the annual Trade Policy Forum (TPF) may not be held this year. The reason: the US administration is apparently unhappy that the previous 10 rounds of the TPF have not yielded the desired results.
This forum was set up 12 years ago to hold discussions on tariff and non-tariff barriers, agriculture, services, innovation and investments and to resolve any disputes that arise on these issues. “The US is yet to appoint senior officials in its trade department, including deputy USTR, with whom details could be discussed. Since the Trump administration is focused on domestic issues right now, we don't think the TPF meeting, which is usually held in October, can take place this year,” media reports quoted an official of India's Ministry of Commerce as saying. The US has, in recent months, complained that India is not complying with World Trade Organisation rules on issues such as prescribing a mandatory domestic content on solar panels and allowing the import of US poultry products. Besides, it has also reiterated its long standing grouse against what it calls restrictive trade practices and patent infringement on pharmaceuticals, IT and intellectual property rights. Gaping deficit India enjoys a $20-billion trade surplus with the US and the Trump administration is believed to be keen on reducing this to a more manageable figure. “It is important that barriers be removed for the export of US goods into your markets and that we reduce our trade deficit with your country,” Trump had told Modi during their meeting. “The United States and India plan to undertake a comprehensive review of trade relations with the goal of expediting regulatory processes; ensuring that technology and innovation are appropriately fostered, valued, and protected; and increasing market access in areas such as agriculture, information technology, and manufactured goods and services,” the joint statement issued after Modi's meeting with the US President had said. But Indian policymakers feel any unilateral concession by India on trade with the US will be extremely difficult without a reciprocal gesture from the White House on Indian concerns over the grant of visas to its professionals. The visa imbroglio One of the big irritants in Indo-US relations is the squeeze on H1B visas that are used by Indian IT majors to send many professionals to live and work in the US. The two governments are in close touch on the issue of Indian professionals being able to work in the US. Gen (Retd) V.K. Singh, Minister of State for External Affairs, had recently told the Rajya Sabha in a written reply that there are six bills relating to the issue pending in the US. “The bills seek to amend the various provisions related to the grant of H1 and L1 visas. However, so far, none of these bills have been passed and no comprehensive policy changes have been made,” he had said. The Indian IT sector is worried that these bills will adversely impact their business. Merit-based entry permits Trump has recently announced his support for a merit-based visa system that favours English speakers. The problem: the legislation behind this system proposes to cut the number of such visas by 50 per cent. Experts in India said the proposed new law, called Reforming American Immigration for Strong Employment (RAISE) may, in fact, help India as it proposes to limit immigration to only highly educated professionals taking up highly paid jobs. “The RAISE Act will reduce poverty, increase wages, and save taxpayers billions and billions of dollars. It will do this by changing the way the US issues Green Cards to nationals from other countries. Green Cards provide permanent residency, work authorisation, and fast track to citizenship," Trump had said. In addition, the new highly competitive application process will prevent immigrants from getting US welfare benefits and protect US workers from job losses. "That′s a very big thing. They′re not going to come in and just immediately go and collect welfare. That doesn′t happen under the RAISE Act. They can′t do that. Crucially, the Green Card reforms in the RAISE Act will give American workers a pay raise by reducing unskilled immigration,” the US President had added. Tough going for junior IT professionals If RAISE is passed into law, it will make it easier for highly qualified and senior Indian personnel to get US visas but effectively close the doors for junior professionals who currently constitute the bulk of H1B visa applicants. The US Citizenship and Immigration Services (USCIS) agency has recently said “an entry-level computer programmer position would not generally qualify as a position in a specialty occupation”. This means Indian IT companies can no longer send personnel from India to fill up such positions in the US. Nomura Research analysts have found that about half of labour condition applications filed by Indian IT companies were for entry level or Level1 positions last year. These applications are sine qua non for H1 B visa applications. This will almost certainly hit the margins and profitability of Indian IT companies. Crackdown on violations Indian IT companies have been accused by a section of US lawmakers of violating visa norms, a charge that industry body Nasscom, individual IT companies and the government have vehemently denied. Many large and medium US companies, too, have been accused of colluding with their Indian counterparts in this regard in order to lower costs. But in an ominous sign, the USCIS agency has said in an advisory issued to US companies that it will “rigorously” use its authority to investigate H1B visa violators, indicating a hardening of attitudes in the Trump administration on the issue. The US Labour Department became the third US government department after the USCIS and the Justice Department to say it will coordinate more closely with other US government departments in its efforts to protect US workers and, if necessary, prosecute offenders. It also joined the Justice Department in cautioning US employers not to use H1B visa holders to discriminate against US workers, and pointed out that this particular visa category can be utilised to import foreign workers only if workers with relevant qualifications were not available in the US. Indian IT companies are the largest users of H1B visas. In 2018, the US plans to issue 85,000 H1B visas, but experts said a change in the minimum wage criteria for issuing such visas would hit the bottomlines of Indian IT companies, which grew at a record slow 9 per cent in 2016-17. There is little likelihood of any great improvement in the current financial year. Indian companies create, not destroy, jobs A study titled “Indian Roots, American Soil” by the Confederation of Indian Industry (CII) and Grant Thornton (GT) last year, about 100 Indian companies have invested $15 billion in US industry and created 91,000 direct jobs in that country. The highlights of the report are: