IT companies should now strengthen domestic market: Ministry panel

The government on Thursday discussed a number of measures to respond to the proposed curbs on H-1B visas in the US with some of the senior officials suggesting that information technology (IT) companies should work towards strengthening domestic industry so that it lowered dependence on other markets.

Speaking to select media, Aruna Sundararajan, Secretary, Ministry of Electronics and IT (MeitY), said that there were two-three things key points that were discussed related to the H-1B visa issues and what should be India’s strategic responses in such a scenario.

“The idea is to have a cohesive response from both the industry and the government. Secondly, India is a robust market and we have to bring up our strengths to be able to respond tactfully. The third issue was how the domestic industry is to be strengthened because in the long run, that will be vital no matter what happens globally,” she said.

Sundararajan was part of the meeting held by the Commerce & Industry Minister Nirmala Sitharaman, who met senior officials from across Ministries and representatives from IT industry body Nasscom.

Apart from the MeitY Secretary, the meeting was attended by Secretaries from the Department of Economic Affairs, External Affairs, Telecom, Commerce and the Niti Aayog CEO.

The government is highly concerned about the Trump regime’s hardened stance on the H-1B visa regime, which could affect the leading Indian companies including Tata Consultancy Services, Infosys, Wipro and HCL Technologies.

The biggest concerns that the Indian companies have are the two legislative bills – one which proposes doubling the minimum wage rate for such visas to $130,000 from the present $60,000 and the other which proposes disallowing companies with more than 50 employees, of which at least half are H-1B or L-1 holders, from hiring additional H-1B employees.

According to R Chandrashekhar, President, Nasscom, there’s nothing that India could do much about the visa issues. “There is a rising trend of protectionalism and we can’t do much about the issue. We just have to understand the concerns and implications of the issues,” he told BusinessLine .

He said the meeting with the Commerce Minister was a welcome initiative as such meetings have never happened earlier where the industry as well as senior officials from key Ministries came together and discussed issues in such a scale.

Sundararajan also said that senior officials in the meeting flagged the general trends in the IT industry including increasing protectionism and what should be India’s strategic responses in such cases.

Apple’s demands are mostly to do with the tax regime so it would all also depend on how GST rolls out in the country, Sundararajan.

“It is a regime change from the usual excise duty. The GST is still evolving. What they (Apple) are asking is to make it profitable for us to manufacture domestically and therefore, asking for a favourable duty regime,” she said.

Exactly how favourable it should be is something that needed to be worked out, she said, adding that the first thing is what will be the manner in which this would be reflected in the new GST regime, which is yet to be decided by the GST Council.

So, it could decided, ‘only once the GST Council decides how the existing trade regime is going to get translated into or how domestic manufacturing incentives are going to get reflected in GST,’ Sundararajan said.

However, on Apple’s plans to export refurbished phones out of India, she said, “as long as they are exporting, the government does not have any problem” as that is not meant for the domestic market.

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