New Delhi: India has objected to a proposed Bill in the US Congress that seeks to extend a high visa fee regime and impose stricter government procurement norms—a move that could hurt India’s information technology (IT) and manufacturing sectors.
The US Senate passed a Bill late on Wednesday to extend the period for higher visa fees from four years as proposed earlier to five years till 2015.
The Bill, termed as the James Zadroga 9/11 Health and Compensation Act of 2010, will provide for health claims of those affected by the September 2001 attacks on the US.
Worth $4.3 billion (Rs 19,350 crore), it will only be partly financed by extending the visa fee hike. A majority of the funds will come from another provision that imposes a 2% fee on goods or services purchased from firms in countries that are not signatories to the World Trade Organization’s (WTO) Agreement on Government Procurement (GPA). This includes India.
The procurement tax will also hurt companies in China, the Philippines, Malaysia and in countries in Africa, West Asia and Latin America.
Commerce minister Anand Sharma raised the issue in a letter to US trade representative Ron Kirk on Wednesday, before the Bill was passed by the Senate.
That was Sharma’s second letter to Kirk in four months, the first being in August. Kirk is yet to reply formally to the letters.
Sharma said the Bill has caused “considerable apprehension and concern to Indian industry... Though we understand that the legislation falls within the sovereign domain of a country, yet the passing of such a legislation would, to my mind, be a retrograde step for greater trade engagement”.
He added that during US President Barack Obama’s visit to India in November, both countries agreed to reduce trade barriers and abjure protectionist measures to facilitate greater movement of professionals, investors and business travellers.
Sharma said the US legislation “will also send a negative signal to Indian investors who have remained firmly committed to partnering with the American companies and have supported jobs even at the peak of the economic crisis”.
Rajiv Kumar, director general of the Federation of Indian Chambers of Commerce and Industry (Ficci), termed the Bill as “clearly protectionist”. He said it went against agreements reached at several summits of the Group of 20—a grouping of the finance ministers and central bankers of 20 countries—to not take any new protectionist measures. “Though India has not signed on the Government Procurement Agreement, it has joined it as an observer,” he said.
Signatories to the GPA do not discriminate against each other on matters of government procurement.
An international trade lawyer who spoke on condition of anonymity said India can’t complain. “If you are not a signatory to the GPA, you cannot complain if any government follows discriminatory procurement practices.”
In August, the US administration passed the Emergency Border Security Bill, which plans to raise $600 million by increasing the fees that companies have to pay to get H1-B and L1 visas for skilled workers, which largely affected Indian IT companies as they use them to ship engineers to the US for onsite work.
According to the National Association of Software and Services Companies (Nasscom), the increased visa fees would cost the Indian industry at least $100 million a year.
“The most disturbing part of the development is that the US continues to exhibit and practice indirect protectionism, by adopting policies that restrict free trade and are discriminatory trade practices,” Nasscom said in a statement on Thursday.
S. Gopalakrishnan, chief executive of India’s second-largest IT firm, Infosys Technologies Ltd, said the spirit of the legislation is not correct even if “it will have not much impact on the company’s balance sheet”. The increased cost in visa fees will eventually be passed on to clients in the US, he said.