Why Modi needs to be vocal about H-1B visas & outsourcing norms in the US

What’s at stake?

At stake is India's $150 billion IT industry, which is staring at increased costs due to the Trump administration's threat of changing H-1B Visa and outsourcing industry norms, that would dent India's revenue from the IT services exports and job opportunities for the Indian engineers.

The biggest beneficiaries of H-1B visas are Indians, followed by the Chinese. According to a Hindustan Times report, “In 2014, 70% of total H-1B petitions approved were from Indians.”

A report by Computerworld analysis says nearly 86% of the H-1B visas issued for workers in computer occupations go to Indian workers.

The services sector contributes 66% to India's gross value added growth and its exports account for 7.5% of the GDP, making the country the eighth largest services exporter in the world.

Needless to say, a major part of these services are related to the IT sector and this is why any threat to the Indian IT/BPO companies is a direct cause of concern for the Indian economy.

As a customary remark, Modi may take to the regular rhetoric on 'the need to counter terrorism and economic cooperation', but unless the Indian PM is able to bring his counterpart to the table to discuss the future of India's IT sector and Indian engineers, any joint statement that promises building up strong relationships would be futile.

Therefore, it is imperative that Modi be vocal about the issue of H-1B visa and outsourcing norms, which Trump's administration has been threatening to change.

Keeping the borders open

India, for long, has adhered to the demands of the US of opening up of Indian markets to US companies. A process of liberalisation that began in the 1990s consisting of four major elements - domestic decontrol, tax reforms and external opening and public sector disinvestment - has been constant and steady. 

Successive governments, irrespective of political ideologies, have stuck to the economic agenda of opening up Indian markets and giving access to US companies to sell their products in India.

In return, India needed technology transfer from US companies and opening up of borders for the movement of its professionals.

On both accounts, the results have been far from satisfactory for India so far. And if the US government goes ahead with its intent to curb issuing H-1B visas to Indian professionals and making outsourcing to Indian shores difficult, it would turn India's relationship with the US less favourable, especially when looked in the backdrop sacrificing its closeness with Russia and China over the years.

Therefore, whatever be the content of Modi's speeches in the US, its immediate success would be judged on whether there are positive highlights on H-1B visas or not.