Round The World

New Delhi, 17 August 2010

Indo-US Ties

LOOMING SHADOWS

By Monish Tourangbam

Research Scholar, School of International Studies (JNU)

The issue of bringing jobs to America is a carrot that US President Barack Obama often dangles to entice American voters. And despite the continuing engagement between India and the US, New Delhi has often found itself at the receiving end of policies trying to curb outsourcing.

The latest, the US Border Security Bill although directed towards putting a check on the flow of illegal immigration through the US-Mexico border, have put a blot on Indo-US economic ties and increased the apprehension of India’s major business with substantial presence in the US market. The Border Security Bill that the President recently signed into law seeks to increase the visa fees in the categories of H1B and L1 to fund border security.

This policy has raised eyebrows among Indian companies that employ skilled workforce who come legally to the US. It seems to make them scapegoats for curbing illegal immigration that has rattled American policymakers and security officials for years. Notwithstanding, what President Obama and American lawmakers intended by this Bill, the very idea of putting the issues of illegal immigration and outsourcing under the same rug does not send encouraging signals as far as Indo-American business ties are concerned. The policy reminds one of a popular Hindi proverb, ‘Ek Teer Se Do Nishana’ (hitting two targets with one arrow) but in this case; the two targets are essentially not of the same nature.

Even in times when employment generation in America assumes paramount importance, fleecing the legal skilled workforce does not seem a wise policy. According to the Bill, companies where American citizens form less than 50% of the workforce will have to pay an additional $2,000 on H1B and L1 visas. President Obama has always managed to register apprehensions among the business circles regarding his fascination with the rhetoric of keeping US jobs in America.

It sounds very legitimate but also serves as an indirect assault on Indian companies doing business in America and legally sending skilled workforce in large numbers. With the US mid-term elections only months away, the President was expected to harp on this policy of making the lives harder for outsourcing.

It did not help matters when Democrat Senator from New York Charles Schumer, sponsored the Bill and called Indian IT giant Infosys a ‘chop shop’ (slang used to describe a business involved with selling of stolen goods). Add to this, President Obama’s favorite election time rhetoric of stopping American jobs from going to India, China or Germany.

While Washington lectures other countries on opening up markets and creating a viable business environment, it seems to be going the other way as the President increasingly equates American competitiveness with denying access to other countries. The policy should be directed towards talking to foreign companies to try and create a level field by gradually increasing the American workforce. The idea should not be to hector and pass punitive measures against foreign companies like Infosys which are intimately connected with the pride and growth of other countries.

In fact, major Indian companies are steadily increasing the American workforce in their corporations. According to sources, presently the percentage is low (hovering around 5-10%) but is rising. Infosys, for example, employs around 12,000 people in North America, including about 1,300 US citizens and permanent residents. In one year, the company intends to hire another 1,000. Another major Indian IT firm, TCS, has increased the headcount of its Cincinnati centre to 350, and the company is hiring locals from campuses. Since 2004, TCS America, the subsidiary of TCS, has invested around $135m in Ohio, Michigan, California and New York.

Expectedly, the Indian Government has strongly protested against the legislation. The Commerce Minister Anand Sharma argued that the Bill unfairly targets Indian companies because U.S. firms like IBM, Microsoft and Intel, take more foreign-work visas than Indian companies, but would not be liable for the increased fees because a greater proportion of their workers are American. Adding, Indian software services companies pay over $1 billion each year to the U.S. Government in the form of Social Security, “with no benefit or prospect of a refund,” an issue that has long irritated New Delhi.

The policy definitely injects a sour taste to the overall bonhomie seen in Indo-American ties, given the major steps being taken to implement the nuclear deal in its entirety and significant strides being made towards taking the relationship to the strategic level. The US-India strategic talks recently held highlights the increasing engagement.

Moreover, President Obama seemed to be coming around and giving more time to enticing India at all major venues but apprehensions still abound as to whether he would match his words with actions. When announcing his impending India visit in early November, he pledged that he would make history and take the relationship to greater heights.

He has time and again reiterated the important place India occupies in global politics and the centrality that his Administration gives to New Delhi. But, analysts in India have often commented on his failure to complement his words with actions. They have begun to wonder if the new Border Security Bill adversely impacting Indian business houses will cast a shadow over his upcoming visit.

The issue might not occupy the hot seat at that time and perhaps be surpassed by the occasion of his first India visit, but various questions are sure to rise during his stay that might put him off the comfortable seat. No matter, US Homeland Security Secretary Janet Napolitano recent comments, “The US and India has a robust and vital relationship and nothing in this Bill should interfere with that.”

True, this issue has no chance of derailing the comprehensive Indo-US relationship which is too diverse and multi-pronged to be threatened by one issue. Nevertheless, the components of the relationship also matter and it augurs well for both countries to smoothen out differences in whichever areas possible.

The US mid-term elections are due in November and at this juncture, President Obama has nothing much to show in terms of foreign policy successes. Most of his Administration’s foreign policy initiatives are still in the realm of uncertainty, too early to be given a verdict.

Significantly, recession and employment generation holds sway among American voters and as such, it was natural for the President to sound the bugle of American protectionism and economic nationalism which always goes down well with many sections of the people. But, just as the American leader has to dance to the tunes of inevitable domestic pressures and demands, the Indian leaders too cannot escape the heady mix of economic priorities and nationalistic outpourings. So, come this November, President Obama better brace up for an exciting and demanding journey through India’s coalition politics. ----- INFA

(Copyright, India News and Feature Alliance)