India Links Visa Flap with Doha Talks

The country's Commerce & Industry Minister says stories of work visa abuse by outsourcing companies could hurt chances for a global trade deal

India's premier outsourcing outfits are facing serious political heat in the U.S. over concerns that they are using the temporary and coveted temporary work visas (known as H-IBs) to replace U.S. employees with foreign workers and paying them below-market wages to undercut U.S. competitiveness. Led by giants such as Infosys (INFY) and Wipro (WIP), these Indian companies use a sizable number of the 65,000 visas allowed each year.

On May 14, U.S. Senators Chuck Grassley (R-Iowa) and Richard Durbin (D-Ill.) sent letters to nine foreign outsourcing companies, asking for detailed information on how they use temporary work visas to bring foreign workers into the U.S. Indian Commerce & Industry Minister Kamal Nath discussed the controversy and the outlook for the Doha round of global trade talks with BusinessWeek.com's Nandini Lakshman. Here are edited excerpts:

Do you think Indian IT companies are misusing the H-1B visas?

We have no information of any misuse by Indian companies. Had there been any, surely the efficient US system would have found the violators. Some time back, there were media reports of some misuse; however, none of them was an Indian company. We are certainly against any misuse.

How serious is this issue for the Indian government?

This is a serious issue, because it affects trade at a time when all the countries are trying to move WTO trade talks forward in a positive manner. At a time like this, signals about the creation of non-tariff barriers send a negative message to negotiators.

In the absence of any other more appropriate category, it is the H-1B visa that is used by service providers in the IT industry to deliver services (often necessitating temporary movement of people for short periods) required by their customers as part of a contract. Restrictions on such movement through artificial caps are certainly a non-tariff barrier to trade.

Since IT services is India's large export sector, this is a matter of considerable concern to the Indian government, and could be a potential roadblock in the trade talks. Moreover, this really should be an important issue between U.S. business and Congress and the U.S. administration.

In what way will these statements by U.S. Senators affect the future of WTO negotiations?

Such statements by responsible U.S. policy makers certainly impact the climate for negotiations because of uncertainties and lack of future predictability. However, I am confident that this will be resolved quickly.

I understand that there are bills in the U.S. Congress to raise the cap on the H-1B visa. This is as important to U.S. companies, which are facing a shortage of tech talent, as it is to Indian IT companies. I am, therefore, hopeful that we will see an early solution.

What kind of breakthrough are you looking at in the service negotiations?

We have to match the breakthrough in services with the breakthrough in other areas. This is very important. That's why we have been talking of receiving 'bankable' commitments in the various services areas of our interest, at the time of the breakthrough. We have made it clear that for India, a breakthrough in services will have to include significant movement from important markets in the areas of our export interest.

Equally important for us is the issue of Domestic Regulations in Services, as such regulations have an obvious impact on market access. Strong disciplines in areas such as qualification requirements and procedures are essential to the market access that is being committed. A good package on domestic regulations is therefore an integral part of the breakthrough for India.