The concerns of both sides were discussed during the recent visit of the US Secretary of State John Kerry to India.

In what is being seen as a quid pro quo, India will push the US Government to scrap the proposed immigration Bill in return for putting a freeze on the go-local manufacturing policy for electronic products.

While the policy to encourage local manufacturing can hurt US electronic majors such as Cisco and Hewlett Packard, the immigration Bill will have a negative impact on Indian IT companies.

According to a top Government official, the concerns of both sides were discussed during the recent visit to India of the US Secretary of State, John Kerry, with the US side linking the two issues. “The US wanted us to address the concerns of American business if we wanted our concerns on the treatment of Indian businesses in the US immigration Bill to be heard,” the official said on conditions of anonymity.

The US industry had been lobbying against the go-local policy under which companies, government institutions and telecom players would have to buy at least 30 per cent of their electronics and hardware requirements from producers that have manufacturing facilities in India.

The policy, called the preferential market access, also stipulated that manufacturers must ensure that value addition happens locally and not just assembling of products. While the IT Ministry wanted to go through with the policy on security grounds, the Government last week put it on hold after the Prime Minister’s Office intervened. Having addressed the US business’ concerns, Prime Minister Manmohan Singh could now take up the concerns of the Indian IT companies with President Barack Obama during his visit to the US in September.

The US Senate has passed a legislation that increases the cap on H-1B visas from 65,000 to 1,10,000, but with restrictive clauses that hurt Indian firms such as Infosys and TCS. If the Bill becomes a law it will restrict a company with more than half its workers on H-1B from applying for more visas from the year 2016 or pay a steep fee of $10,000 per visa.

thomas.thomas@thehindu.co.in

(This article was published on July 11, 2013)
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