Indian IT industry faces risks from rising protectionism in the West

Indian IT industry faces risks from rising protectionism in the West

SAM Staff,

Under a new executive order signed by US President Donald Trump, the US is reviewing its visa program for foreign workers. The H-1B visa program is most sought-after by Indian IT firms and professionals to work on client project sites.

The US grants 65,000 H1B visas annually, while another 20,000 are set aside for those with US advanced degrees, and Indian IT companies are its overwhelming beneficiaries.

“No new changes are being implemented immediately… Nothing is being proposed that would impact or change the FY18 H-1B lottery that is currently underway,” NASSCOM said in a statement.

Another industry body, the Associated Chambers of Commerce of India (ASSOCHAM) was more forthright in expressing concerns over the tightening of visa norms.

“Indian IT companies are bound to face disruptions by way of higher costs and even some laying off workforce back home, as the rising rupee is aggravating the situation further for the technology export firms,” its statement read.

The H-1B visa overhaul in the US has set in motion the politics of protectionism in other Western countries and its allies.

On Tuesday, Australia abolished the 457 visa program used by over 95,000 temporary foreign workers, the majority of them Indians, to tackle unemployment.

Last year, the UK announced tougher, more expensive visa rules affecting Indians, other nationals from outside the European Union. Companies in the UK hiring workers from outside the EU, such as Indians, will have to shell out an additional £1,000 annual “Immigration Skills Charge”.

France, too, could go the way of its prime NATO allies, if anti-immigrant parties win the upcoming presidential elections.

Experts agree that a wave of protectionism has swept the US and Europe with the emergence of Centre-right governments and there is very little emerging economies like India could do at present.

“It’s about protectionism that is becoming a trait of the emergence of centre-right governments in Western countries. Economic and security matters both are at work behind this. India will see a drop in immigration because of economic reasons,” said Ashok Sharma, a Fellow at the Melbourne based Australia-Indian Institute.

However, “India can’t go for protectionism. It needs investment and businesses will continue to come to India. Remittances from the diaspora will not be big enough for India, looking at its growing economy. Other emerging economies are still not at par with the US or European economies when it comes to investment,” he added.