&imwidth=800&imheight=600&format=webp&quality=medium "What Raghuram Rajan said on H-1B visas, HIRE Act in the US")
The proposed US Halting International Relocation of Employment (HIRE) Act is a greaterthreat to the Indianeconomy than the recent hike in H-1B visa fees, said former RBI governor Raghuram Rajan in an interview. He said the proposed law can impose tariffs on outsourcing services, which could impact India's IT industry and services exports.
He said in an interview with DeKoder that the US may find ways to impose tariffs on services, which could be a threat to New Delhi.
"How that’ll be implemented is anybody’s question, but this creeping of tariffs beyond goods to services to Indian visitors into the US through the H-1B route – these are all concerns,” Rajan told DeKoder.
HIRE Act
The HIRE Act aims to protect jobs in America by making outsourcing expensive. It proposed a 25 per cent outsourcing tax on businesses. Also, for payments made to foreign workers for services availed in the United States, businesses will not be able to claim such expenses as tax-deductible expenses.
The revenue generated from the tax will fund training and apprenticeship programmes for American workers.
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If these taxes are introduced, India's outsourcing as well as service jobs will be under threat. Most of India's IT companies thrive on American outsourcing.
Raghurajansaid that the need for H-1B visas has declined over the years because services are being delivered over the internet. He said Indian companiesare doing backend work in India and hiring locally for customer-facing jobs.
He said Indian companies can also recruit Indian students studying in US institutions. "There will be adjustments, and the net effect will be less H-1B immigration, but it doesn’t look as bad as it first seemed. The HIRE Act is much more important for us,” he added.
US President Donald Trump has levied 50 tariffs on Indian goods as New Delhi had been buying Russianoil and weapons. Last month, he imposed a fee on new H-1B visas, impacting Indian companies and workers.