Indian corporates could slow down investment in the US if the strict American policy on issuing temporary visas is not relaxed, says a study by a leading industry lobby and a global consultancy.
"The tight-fisted US policy on the grant of H-1B visas to Indian employers may dampen the appetite of Indian corporates for investing in the US," said Federation of Indian Chamber of Commerce and Industry (FICCI) and consultancy Ernst and Young in a statement on Thursday.
H-1B visas are temporary visas that permit foreign nationals to work in the US on short-term projects as a prelude to a green card.
The statement said that according to the US Citizenship and Immigration Services, use of H-1B visas by Indian companies declined 27 per cent from 2006 to 2008.
"In 2008, Indian employers utilised only 11.9 per cent of all H-1B visas issued," the statement added.
"The immediate impact will be the denial of the huge contribution by India Inc to US employment, capital growth and tax revenues," they said after conducting a joint study on "Direct Investments by Indian Companies in 2007-09 in US".
"If we look at the US market, there is a tremendous growth potential for Indian MNCs. In 2007, the foreign direct investments stood at $276,835 million. India's share was just a fraction of this," the study added.
According to it, Indian companies have made 143 acquisitions across various sectors in the US since 2007.
In 2007-08 alone, 94 deals were concluded. The value of 55 disclosed deals stood at $4,432 million.
Last fiscal, the study said, Indian companies were involved in 49 acquisitions in the US. Of these, the disclosed value of 24 deals totalled $960 million.
Five companies, including Tata Chemicals, Wipro and Reliance Communications, accounted for deals worth $2,778 million.
"The US manufacturing sector, in particular, has benefited from foreign investment. Nearly 30 per cent of jobs created by US affiliates of foreign companies are in this sector and forms about 12 per cent of all manufacturing sector jobs in the US," said FICCI secretary general Amit Mitra.
A 2008 study by the US-India Business Council (USIBC) and FICCI had said 12 Indian companies created and retained 30,000 jobs in the US.