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29 April 2017 Editorial

 

29 APRIL 2017

Facing up to IT

On visa rules posing challenge to Indian IT companies

Stringent visa rules around the world pose the stiffest challenge for Indian IT companies

A globalising world enabled the spectacular rise of India's information technology industry over the last couple of decades. The IT sector not only pulled up the GDP but also came to symbolise young India's aspirations. With the world now bending towards protectionism, it faces a challenge to its talent-centric, software export model. In recent weeks, a slew of countries, which are estimated to account for three-fourths of the industry's revenues, have placed stricter rules on their companies getting talent from overseas. Whether the challenge of protectionism fades out or deepens over a longer time horizon will depend on the global economic outlook. The visa rule changes for Indian tech personnel weren't wholly unexpected, especially after Brexit and Donald Trump's victory in the U.S. on the back of, among other things, promises to put the brakes on outsourcing. Only, now governments are acting upon such rhetoric in some countries, including the U.S., the U.K., Singapore and Australia. President Trump signed the ‘Buy American, Hire American' executive order last week, seeking to raise the bar for the award of H-1B visas, an important route for Indian companies, so that they are given to the "most-skilled or highest-paid" beneficiaries. Earlier this month, the U.K. scrapped a category of short-term visas that have been used extensively by Indian companies to get their IT professionals on-site. The Australian equivalent of this is the recent junking of what are called the ‘457 visa' rules. Singapore has reportedly kept approvals for work permits on hold for a while now.

 It is still too early to gauge the exact impact on IT companies, in part because much depends on their ability to rework their operational models to do less on-site. As it is, it is a challenging time for the industry - with slowing business growth, a strengthening rupee, not to speak of the difficult transition from a traditional model that was based on making money by building custom solutions and undertaking maintenance to one that is cloud-based. Industry lobby Nasscom, which in February quite unprecedentedly put off its annual revenue forecast by a quarter amid uncertainties on the policy front in the U.S., has in recent days sought to counter the impression that it is Indian IT companies that are getting the lion's share of H-1B visas for Indian nationals. Those who believe the challenge will blow over take heart from the fact that there is no legislation hurting outsourcing on the immediate horizon and the belief that the developed world cannot really do without India's IT skills. The government, which has reportedly sought a World Trade Organisation-backed framework to facilitate trade in services in the light of rule-tightening by the developed countries, is naturally concerned. The industry, which employs over 3.5 million people and earns over $100 billion in export revenues, is now navigating a world with walls.


No full stops

On Bhutan's exit from the ‘BBIN' agreement

Bhutan's exit from the ‘BBIN' agreement should not hold up the road-sharing pact

Bhutan's announcement that it is unable to proceed with the Motor Vehicles Agreement with Bangladesh, India and Nepal is a road block, and not a dead end, for the regional sub-grouping India had planned for ease of access among the four countries. The sub-grouping, BBIN as it is referred to, was an alternative mooted by the government after Pakistan rejected the MVA at the SAARC summit in Kathmandu in 2014. It seeks to allow trucks and other commercial vehicles to ply on one another's highways to facilitate trade. Of the other SAARC members, Sri Lanka and the Maldives are not connected by land, and Afghanistan could only be connected if Pakistan was on board. Down to just three countries now after Thimphu's decision, India, Nepal and Bangladesh will have to decide whether to wait for Bhutan to reconsider or to press ahead with a truncated ‘BIN' arrangement. The first option will not be easy. The main concern expressed by Bhutanese citizen groups and politicians is over increased vehicular and air pollution in a country that prides itself on ecological consciousness. The upper house of parliament has refused to ratify the MVA that was originally signed by all four BBIN countries in 2015, and the official announcement indicates that Thimphu will not push the agreement ahead of elections in 2018.

Despite the setback, New Delhi must persevere with its efforts. To begin with, Bhutan's objections are environmental, not political, and its government may well change its mind as time goes by. Dry runs have been conducted along the routes, and officials estimate the road links could end up circumventing circuitous shipping routes by up to 1,000 km. Second, Bhutan's concerns may be assuaged if India considers the inclusion of waterways and riverine channels as a less environmentally damaging substitute. Perhaps, Bhutan's objections may even spur an overhaul of emission standards for trucks currently plying in India, Nepal and Bangladesh. Above all, the BBIN pact denotes a "can-do" attitude on India's part, as it shows a willingness to broaden its connectivity canvas with all countries willing to go ahead at present, leaving the door open for those that may opt to join in the future. A similar initiative for the Asian Highway project under the BCIM (Bangladesh-China-India-Myanmar) corridor got a boost this week as the countries moved to upgrade the dialogue to the governmental level. Although India has refused to attend China's Belt and Road summit on May 14-15, objecting to projects in Pakistan-occupied Kashmir, the BCIM will remain a way of joining the network when India's concerns are met. Connectivity is the new global currency for growth and prosperity as it secures both trade and energy lines for countries en route, and India must make the most of its geographic advantages.

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