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Indian IT Sector Warns Against U.S. Visa Bill

January 31, 2017

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Indian Prime Minister Narendra Modi speaks at the opening ceremony of 'Make in India Week' in Mumbai on Feb. 13, 2016. PUNIT PARANJPE/AFP/Getty Images

India’s IT lobby warned on Tuesday that a bill before the U.S. Congress aimed at imposing tougher visa rules unfairly targets some of its members and will not solve a U.S. labour shortage in technology and engineering.

Industry lobby group Nasscom was responding to a bill introduced by Congresswoman Zoe Lofgren, a Democrat from California, that would double the minimum salary required for holders of H-1B visas to $130,000 and determine how many of the visas were allocated, based on factors such as overall wages.

India’s $150 billion information technology sector, led by Tata Consultancy Services, Infosys Ltd and Wipro Ltd, uses the H-1B visas to fly engineers and developers to service clients in the U.S., their biggest market, but opponents say they are using the visas to replace U.S. workers.

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“The Lofgren Bill contains provisions that may prove challenging for the Indian IT sector and will also leave loopholes that will nullify the objective of saving American jobs,” Nasscom said.

The industry body said the bill did not address the shortage of skilled STEM (science, technology, engineering and mathematics) workers in the U.S., adding that its provisions were “biased against H-1B dependent companies”.

The chief executive of Tech Mahindra, the country’s fourth-biggest software services exporter, said the Indian IT sector was already looking for alternatives.

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“We will have to wait and watch for any impact felt on us after a few quarters,” C.P. Gurnani said in a statement.

“Indian IT is already creating jobs and have been investing in form of setting up delivery centers and local hiring.”

India’s Ministry of External Affairs said in a statement on Tuesday it had expressed its concerns to the U.S. government, without providing further details.

“India’s interests and concerns have been conveyed both to the U.S. Administration and the U.S. Congress at senior levels,” Vikas Swarup, a spokesman for the ministry, said.

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Shares in India’s IT firms have tumbled in recent days on worries about the impact of the bill. The Nifty IT index fell 3.2% on Tuesday after earlier hitting its lowest since Nov. 24.

Analysts have said the bill would push India’s software services exporters to ramp up automation, reducing the need for workers, although IT firms would still need to hire more workers in the U.S., including university graduates, increasing costs.

“All companies will have to bear higher expenditure if this bill gets passed, and the impact can be quite severe,” Dipen Shah, senior vice president of the Private Client Group Research, Kotak Securities, said.

“There will be a severe hit (to) profitability.”

TCS, Infosys and Wipro declined comment, while smaller rival HCL Tech did not respond to requests for comment.