Manmohan – Obama to discuss the new US Immigration Bill

When Prime Minister Manmohan Singh meets US President Obama on Friday, the meeting will be a critical one for the Indian tech companies and the skilled expatriates. The Prime Minister is going to raise the new Comprehensive Immigration Reform bill that is in front of the US House of Representatives.

The immigration bill stipulates that companies in the US should cut their visa workforce to 50 percent by 2017. Besides, companies that have more than 75% of their workforce from H1B or L-1 visas would be banned from getting more visas from 2015.

The two provisions are death blows to the Indian tech firms like TCS, Infosys and Wipro who employs large number of Indian professionals in their US operations. Though the new immigration law is aimed to provide citizenship to 11 million undocumented immigrants in the US, the native tech companies like IBM, Accenture etc were able to pressurize the law makers to insert the anti-visa clause to beat the Indian tech firms.

There are two visible adverse effects from the proposed bill. Firstly, it will reduce the remittance income to the country. India’s current account is not collapsing mainly because of the two items of remittances from abroad and software exports.

India is the largest remittance receiving country and nearly 55 percent of the country’s remittances are coming from the US.

Remittance is the largest item in the invisibles whereas software exports are the second largest item. Both these two brings an inflow of $115 billion which is very necessary to fill the trade deficit of nearly $195 billion. Without remittances, India would have undergone a severe BoP crisis.

The Indian tech firms in the US are relying on skilled labour from India to reduce cost. Hence the new bill will seriously erode their cost advantage. Therefore, PM’s meeting with the US President is going to be a critical one for them as well. 

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