India frets as Senate clears Immigration Bill; Nasscom calm

Indian IT companies are a worried lot. The far-reaching US Immigration Bill has just sailed through the US Senate's test vote. This implies that the Bill is likely to make it through Thursday's final vote as well.

For Indian IT companies this will mean more bad news - visa constraints and higher costs. But IT industry body Nasscom has still not lost hope, reports CNBC-TV18’s Shreya Roy. Also Read: Silicon Valley intensifies lobbying on US Immigration Bill
The US Immigration Bill cleared the Senate's test vote on Monday by 67-27, seven more votes than the 60 needed. This overwhleming majority has taken the Bill one more step closer to becoming legislation. While this is good news for the US in its attempt to curb illegal immigration and strengthen border control, it's potentially bad news for Indian IT giants for whom the cost of doing business will exponentially surge.
The Bill contains some worrying provisions such as caps on the number of H1-B workers that companies are allowed to place onsite; companies will be banned from employing more than 75 percent of their workers on an H-1B visa in 2014, decreasing it to 65 percent in 2015, and 50 percent in 2016; higher costs of H1 B visas for companies with more than 30 percent of their US workforce dependent on H1-B visas.
But IT companies aren't the only ones likely to feel the heat. Analysts estimate that the H1B visa regime as proposed in the Bill could end up impacting India's GDP by USD 6 billion. According to JP Morgan, "We find to our surprise that the outplacement clause could take away as much as 0.3-0.4 percent of India's FY15 GDP. The impact could be closer to the lower end of this range (0.3 percent), if the Indian IT sector can proactively put in place offsetting mechanisms early enough."
Nasscom, which has been lobbying to turn things in the IT sector's favour, however remains hopeful. Som Mittal, president, Nasscom, says, "It is a long process and there are several points of intervention. We are quite hopeful the US lawmakers know the unintended consequences of these provisions."
And it is indeed a long process. The BIll will next be sent to the House of Representatives for further debate and consideration. But having already cleared the Senate's test vote and President Barack Obama already on board, the passing of the Bill now looks more certain than before.