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Journalism of Courage
NewDelhi, Aug 21: National Association of Software and Service Companies (Nasscom) today opposed the direction given by the Reserve Bank of India (RBI) to exporters to scale down the balances in Export Earners’ Foreign Currency (EEFC) account by 50 per cent saying it would adversely affect software exports.
"This arbitrary and sudden move by RBI will be detrimental to software exporters and it is not in line with the liberalisation process adopted by government of India," Dewang Mehta, president of Nasscom told reporters here.
With effect from August 14, 100 per cent export oriented unit or a unit in export processing zone or software technology park are only allowed to credit 35 per cent of their eligible inward foreign curreny remittances as against the earlier figure of 70 per cent.
"We are for stronger rupee against US dollar but we will not support any arbitrary move by the RBI to increase the foreign exchange reserves," Mehta said, adding that this would adversely affect the software industry.
Software exporters would not be able to meet their import bills, he said and asked the RBI and the Finance Ministry to allow the exporters to keep foreign currency upto 70 per cent of their earnings.
Plea for more US visas:Nasscom said it had urged Prime Minister Atal Behari Vajpayee to push for a raise in work permit visa limits for technology professionals during his US visit next month. It also said Vajpayee would seek an early signing of a "totalisation agreement" with Washington to eliminate payment of social security charges by Indian workers in both countries.
Nasscom president Dewang Mehta said the industry wanted an immediate removal of such barriers and added costs, which he said were non-tariff trade barriers. "The main issues of NTM (non-tariff measures) with the USA which need to be addressed relate to avoidance of double payment of social security; increase in global H-1B (work permit) visa cap and removal of locational constraints in H-1B visas," he said in a statement.
The United States accounted for about 60 per cent of India’s software exports of $4.0 billion in 1999/2000 (April-March). Indians make up the bulk of the H-1B visas which enable Indian software engineers to spend three years working in the United States.
The United States allowed 115,000 H-1B visas in the 1999/2000 (October-September) period, but the quota was exhausted last March. The quota, which was 65,000 in 1997/98, was at the 115,000-level for the next two years, and would drop to 107,500 in 2000/01.
Industries in both nations want the quota hiked substantially to feed a huge hunger for technology professionals. Two separate bills, one each in the US Senate and Congress, propose to raise the annual quota to 195,000 or 200,000.
Mehta said nations like Australia and Ireland had totalisation agreements in place which eliminate social security payments in two countries. US laws state that social security gains can be had only if payments are made for at least 10 years but workers under H-1B visas do not benefit from them as their visas are valid for only three years and can extend by another three, Mehta said.
"This money is going down the drain and making the Indian industry less competitive by 10 to 14 per cent (of costs)," Mehta said. He also called for restrictions on the location of technology workers under visa rules, saying it went against the trend of globalisation, when workers moved freely. "We want this old, archaic law to be done away with," Mehta said.
