All eyes on Modi-Trump meet, and why curbs on H-1B visa may be good for India

The US restrictions on H-1B visa may have the unintended effect of freeing up Indian talent there, who can then focus on building software for Indian problems and needs. Everything from agriculture to transportation to retailing can benefit from fresh ideas by approaching problems with technology interventions.

Key takeaways

• US to push operational military alliance; India to stay clear from this.
• India to ask for investments in defence and infrastructure.
• Modi to push Startup India and collaboration with US companies.
• Trump will hopefully clarify the H-1B visa conundrum.
• Make in India will be the priority after defence discussions.

All eyes are on Washington ahead of Prime Minister Narendra Modi's first sit-down meeting with US President Donald Trump on Monday.

Modi arrived in Washington on Sunday morning (India time) to a red carpet welcome. However, his second visit to the US in a little over a year assumes a lot of significance as it comes at a time when the new dispensation has effected major policy shifts with far-reaching consequences for the whole world including India.

At a time when geopolitical relations are more important than ever before, Modi will try to woo the US President into making India a trusted business and global defence ally. Naturally, Modi wants India to have working relationships with nations that have the power of capital and those that can invest in the growth of the country.

The two leaders have spoken thrice on the phone since Trump was elected last year and have exchanged ideas about better bilateral ties. In this first face-to-face meeting, however, the stakes will be higher.

Several US companies are already making India their manufacturing or assembly base. Apple recently began shipping phones assembled in India; the move is testimony to the fact that the current government wants to see greater investments from the US.

Perhaps, the US has more to gain by partnering with India. “We are the brain in the world as Indians build the software needed for every machine. We stand on firm ground when compared with other nations because we have solutions to build for the country,” says Vijay Ratnaparkhe, MD of Robert Bosch Engineering India.

Now, the question is whether this meeting will turn out to be a meeting of minds because Trump is quite unhappy with the tactic of labour arbitrage through immigration that Indian software companies employ to save on margins, and he blames them for not hiring locally within the US.

Infosys was the first to seize the initiative and has committed to employ 10,000 people from the US and also set up a centre of excellence in the country.

The hullaballoo over H-1B

Modi is up against a man who thinks of America in the traditional sense—a superpower that dominated half the world with almost no competition—and is not a proponent of globalisation. He is also not as eloquent as former President Barack Obama was. Trump’s philosophy is rooted in the dead steel mills of Pittsburgh, which he referred to during an interaction with the media—that he represents the voter base in the ‘Rust Belt’ of America—following the announced that the US was pulling out of the Paris Agreement on climate change.

Modi will have to play his cards tactfully as he navigates a three-point agenda with Trump. The first would be to make sure that there is clarity on the H-1B visa. The second would be a chat about defence contracts and the Make-in-India programme. Finally, they will also need to discuss India’s rise as a startup nation.

While this is our wishlist, sources in the industry say that defence and investment in infrastructure will take priority over startups and H-1B visa. In fact, supporters of Make in India will be happy that the country will retain its talent thanks to Trump’s stringent rules on the much-coveted US work visas.

“The H-1B visa issue will hit profits in the short run. But I don’t see it impacting the IT industry’s revenues because they are going after new lines of business,” says Pari Natarajan, CEO and Co-founder of research and consulting firm Zinnov.

Pari adds that the important part would be to discuss how Indian startups could support global corporations and also be of value to the US by collaborating with local companies there.

Today, a large number of Indian-origin startups such as Lavelle Networks, Karomi and Rubrik are focusing on technology that helps US businesses. The likes of FreshWorks (earlier FreshDesk) and Helpshift have substantial US operations.

“The (change in norms for) H-1B visa affects only those who are in IT services and at the base level of application development and maintenance at the client side,” says Shyamal Kumar, Co-founder of Lavelle Networks. He says those senior levels will continue to get visas.

Trump has already made it clear that IT companies have to hire locally and even spelt out the minimum annual salary for an H-1B worker at $130,000 (double that of the current minimum of $60,000).

“We are already building the connected vehicle and smart city infrastructure for the world out of India,” says Saighiridhar V, Director of Engineering, R&D at Savari Networks, a smart transport solutions provider, including sensors for autonomous cars.

With Indian technology being piloted in global markets like the US, we would need US policymakers to support Indian businesses going to the US.

More from Make in India                      

Last year, the Make in India campaign garnered $222 billion in pledges from various organisations, including Oracle, which announced that it would invest $400 million in the country. However, of the total number of pledges made, analysts estimate that only about $20 billion will come into the country over 2017 and 2018. Modi will be hoping to increase this figure significantly.

Last year, when Modi met Cisco founder John Chambers at the United States Indian Business Council, the latter told him that Cisco had already invested around $28 billion in the country between 2014 and 2016. With the Goods and Services Tax (GST) getting implemented from 1 July, US-based companies like Amazon will very likely be investing more into the country’s logistics.

Investments vs military alliance

India’s trade with the US was worth $62 billion in 2015, making the US India’s second-largest trading partner after China. Right now, India needs investments in infrastructure and defence. Sources in the industry say that the US, however, wants to push an operational military cooperation between the two countries rather than sharing and transferring weapons-related technology.

Modi’s challenge, then, will be to diplomatically steer clear of a military alliance with the US because India does not want to strain ties with Russia and China.

“The future lies in collaboration with several companies, at least in technology, and India has a defined startup plan for US companies to start making use of the ecosystem,” says Jay Krishnan, CEO of Hyderabad-based T-Hub, the country’s largest incubator.

Come Monday, Trump’s intentions towards Indian businesses should become much clearer, and hopefully, the focus will be on forging a stronger partnership with India rather than making it a one-sided relationship.