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India can take US visa curbs to WTO

Visa restrictions that place curbs on market access amount to a protectionist practice that India can take up with the WTO. The commerce minister in the newly elected government has his or her job cut out. Narayan Madhavan writes.

india Updated: Apr 26, 2009 22:55 IST
Narayan Madhavan

Last week, the National Association of Software and Service Companies (NASSCOM) and global consulting firm McKinsey said in a report that the country’s annual exports in this sector could treble to $200 billion by 2020 from the current level of around $47 billion by addressing new markets and sectors. While that was optimistic, it added that that political risks were another story.

In the same week, in the United States, the leading market for India, two Senators introduced a bill, which if it becomes law, wants restrictions on H1B and L1 visas used by tech firms to employ high-skilled professionals. The bill wants H1-B visas only if local citizens cannot fill up the posts concerned, and also imposes restrictions on non-Americans in companies applying for H1B workers.

It is clear that IT outsourcing is in a trickier phase politically. I do believe that politicians always try to save local jobs to get votes, while business leaders always try to maximize profits. This is nothing new, but the question is whether the new rules, if at all they become law, can put companies like Infosys and Tata Consultancy Services at a disadvantage vis-à-vis US-centric companies like IBM or EDS.

What can India dow now?

The simple answer is that the Indian government has elbow room in world trade negotiations that it can use if there is no level-playing field for the country or its workers. More than two decades ago, the Uruguay Round of negotiations that eventually led to the formation of the World Trade Organisation (WTO) in 1995 placed services on the agenda alongside merchandise goods.

More important, at the Marrakesh talks at Morocco in 1994 that gave the final touches to the WTO, India argued for the inclusion of “Movement of Natural Persons” in trade talks,

Visa restrictions that place curbs on market access amount to a protectionist practice that India can take up with the WTO. The commerce minister in the newly elected government has his or her job cut out.