8 SUNDAY TIMES OF INDIA, NEW DELHIJANUARY 22, 2017TIMES NATION | Don Of A New Era

Trump’s ‘US First’ Talk Has India WorriedNew Delhi: US President Do-nald Trump’s tough talk ontrade and economic policieshas emerged as a fresh riskfor the Indian economy,which is recovering from theimpact of demonetisation.

While it is too early to as-sess the impact of any possi-ble policy changes in the US,several sectors of the Indianeconomy as well as exportsmay be hurt if Trump imple-ments the changes he hastalked about. Experts andpolicy-makers are adopting a‘wait- and-watch’ stance.

“Trump has made it veryclear that protecting Ameri-can interests is his main pri-ority. His focus is on gettingjobs and manufacturingback to the US. This couldhave an impact on H-1B visasfor India. We have to wait andwatch as to the stance theTrump administration takeson the intellectual propertyissue,” said Biswajit Dhar,professor at JNU.

“The second issue is thetrade surplus that India en-joys vis-a-vis the US. Past ad-ministrations have beenpressing India to lower the bi-lateral trade imbalance. Thestand taken by the new admin-istration on this issue is some-thing that we would have towait and watch. An indiffer-ently performing global mar-ket has already left its adverseimpact on India’s exports over

the past two years. If Trumpimplements his much publi-cised inward-looking policies,Indian businesses would needto seriously re-think theirstrategies,” Dhar said.

Two-way trade with the UShas shot up more than five-fold, from about $19 billion in2000 to over $100 billion in 2014,and the US is currently India’ssecond largest trade partnerand the largest export destina-tion, according to industry es-timates. Both sides havevowed to increase their bilat-eral trade turnover to $500 bil-lion in the years ahead.

Experts said the govern-ment and the RBI needed topush reforms and policies toensure that any sudden im-pact from the kind of policiesTrump has vowed may be ab-

change rate and capital flowpolicies,” he added.

India Inc said any reversalof economic and free tradepolicies was likely to hurtglobal growth, and pointed tothe investment in the US byIndian companies. Any up-heaval in the global economyagainst a backdrop of slow-ing growth could hurt India’seconomic expansion — theIndian economy is estimatedto grow by 7.1% in 2016-17.

“While we welcome the‘America First’ strategy ofPresident Trump, we hopethat it will not lead to a newera of protectionism. The UShas always been a championof free trade and economic in-tegration. A reversal of thisstance would indeed be seri-ously detrimental to globalgrowth,” Chandrajit Baner-jee, director-general at theConfederation of Indian In-dustry (CII), said.

He said Indian companieshad invested in around 40 USstates, operating in sectorssuch as IT and healthcare,among others.“Nearly 100 In-dian companies have invested$15 billion in the US economyand generated around 1 lakhjobs. These companies are cre-ating and saving jobs, engag-ing in research and develop-ment as well as in corporate so-cial responsibility initiatives—the tangible benefits of suchFDI therefore flow directly tothe local communities inwhich they operate,” he said.

sorbed. “Employment is goingto be a major policy issue. Sim-ilar protectionist policies arebeing pushed in the Europeanregion. It would have a signifi-cant impact on India’s servic-es sector. We need to have poli-cies that would result in trans-formative growth and absorbany drop in employment dueto global protectionist poli-cies,” said N R Bhanumurthy,professor at National Instituteof Public Finance and Policy.

“IT and IT-enabled servic-es may feel an immediate im-pact... Both trade and foreigncapital flows are expected tosee some dent if he imple-ments the policies that he hastalked about. The RBI needsto be more cautious in deal-ing with the external sectorpolicies, especially the ex-

Let us wait and watch, say expertsSurojit.Gupta@timesgroup.com

Mumbai: Foreign exchangedealers are expecting a freshbout of uncertainty in thecurrency markets on Mon-day. US President DonaldTrump’s protectionist inau-gural speech saw Americanequities close higher, but thelack of clarity on policy hasraised doubts over how sus-tained the dollar rise will be.

There is wide expectationthat the dollar will openstrong next week, consider-ing Trump’s proposals on taxcuts and promoting localmanufacturing along withcurbs on imports. Ahead ofTrump’s inaugural address,the rupee fell five paise toclose at a one-week low of Rs68.18 on Friday. It is expectedto trade between Rs 68 and Rs69.5 in coming weeks.

According to Ashish Vai-dya, head of trading and as-set-liability management atDBS, some of the protection-ist measures might be posi-tive for the US economy, andthere have already been somecapital flows from emergingmarkets to the US and somemore may follow. “Overall, Ithink it is going to be negativefor the emerging markets. Al-most all the analysts are nega-tive on the rupee,” he added.

“Stock markets globallywill have a negative wavewhich will feed into our mar-

kets too. Trump’s ‘Make inAmerica’ platform appearsintact, and he is the type toget down to work on both po-litical and economic issuesASAP,” said Madan Sabna-vis, chief economist, Care.

However, it does not stilllook like India is a target andhence, while IT stocks will be

cautious, there is no threat ofany immediate embargo, un-like say for China or Mexico,he added.

What will impact India isthe combination of Trumptaking charge and US FederalReserve chair Janet Yellensaying that the US is on its wayto a recovery and highergrowth. “Then funds in gener-al may slow down to emerging

ladher. He said one needed toclosely watch the detailedfleshing out of Trump’s poli-cies over the next few days togauge the exact impact.

Trump’s inaugurationhas pushed Dalal Street inves-tors on a wait-and-watchmode with a negative bias to-wards the companies and in-dustries that count the US as amajor market, especially soft-ware services and pharma.

“The market will be ap-prehensive of Trump’s poli-cies and about what he ac-tually means when he says‘Buy American, Hire Ameri-can’,” said Nilesh Shah, MD,Kotak Mahindra MutualFund. “IT and pharma com-panies, along with other ex-porters to the US, would beunder the radar. However,what could emerge as the sil-ver lining is if Trump’s anti-China policies actually resultin a pro-India stance for theUS,” Shah said.

Among the leading Indi-an IT companies, the stockprice of TCS, currently at Rs2,287, has barely changedsince November 8, the day ofthe US presidential election,while Infosys has lost 4.1%and Wipro is up 5.2%. Amongthe pharma stocks, Lupin isdown 3.2%, Cipla is up nearly7%, Sun Phrma has barelymoved while Dr Reddy’s Lab-oratories is down 5.7%. Incomparison, both Sensexand Nifty are down about 2%.

countries and we cannot be in-sulated here,” said Sabnavis.

A stronger dollar does notbode well for inflation sinceall imports are denominatedin dollars. This would raisethe cost of imports of com-modities such as oil, whichhas already firmed up 25% inrecent months.

“A Trumpian view thatlooks at global trade and com-merce and geo-strategic alli-ances as a zero-sum gamewith losers and winners, asagainst a win-win for both thetrading partners and geo-strategic allies, can only fueltrade wars. Trade wars, retal-iatory tariffs and barriers tofree movement of people andtrade can cause turbulence inglobal markets,” said AjayBodke, CEO and chief portfo-lio manager, Prabhudas Lil-

Markets not sold on Trump talk

Bengaluru: Donald Trump’smaiden presidential addresson Friday could not but havebeen unnerving for India’sbiggest export industry — ITservices. Close to 75% of theindustry’s $150 billion reve-nue comes from exports, 60%of which are to one country —the US. Worse, Trump’s ‘BuyAmerican, Hire American’campaign has the potential tohit the industry on bothfronts. It could persuade UScompanies to slow down theirIT outsourcing to foreign (pri-marily Indian) companies.And given that Indian IT ser-vices companies have builttheir entire model on the basisof moving most of the work ina contract to India — what’scalled offshoring — ‘hire Ame-rican’ policies could forcethem to substantially reworkthat model. And that will nothappen without a sharp sque-eze in profit margins.

Tom Reuner, managing di-rector of US-based IT adviso-ry firm HfS Research, said thetimid hopes that Trump wo-uld moderate his views as Pre-sident have evaporated. “Thecentrepieces of his inaugura-tion speech were jingoism andprotectionism,” he said.

Already, several moves ha-ve been initiated to make it mo-re difficult for Indian IT servi-ces firms to deal with US cont-racts. These include efforts tomake US work visas more dif-

ficult to obtain. An essentialingredient of the IT outsour-cing model is to send Indianengineers to the US to under-stand customer requirementsand finally implement and testthem, though the substantialin-between work of softwaredevelopment would be done inIndia. For this reason, IndianIT companies are the biggestusers of US work visas likeH-1B and L-1. New legislationhas been introduced seekingto raise the minimum wageunder H-1B to $100,000; that’s

bring in significant numberson H-1B, they remain unaffec-ted because they have a largebase of local US employees.“If low wage employees arebrought into the US, how doesit matter whether they are be-ing brought in by Indian com-panies or others?” he asks.

Visa pressures and otherbusiness requirements havealready made Indian IT com-panies increase their effortsto hire more locals. Trump co-uld compel an acceleration inthat trend.

50% over the median wage of$61,000-$71,000 that most com-panies now pay.

Nasscom president RChandrashekhar says most ofthese legislations fundamen-tally discriminate against In-dian IT companies. They in-variably make the provisionsapplicable only to companiesthat have more than 50% oftheir employees in the US onH-1B or L-1 visas. Only Indiancompanies would fall in thatcategory. So, even though ri-vals like IBM and Accenture

Tremors in hunting ground shake IT

Lubna.Kably@timesgroup.com

Mumbai: Indians wishing toimmigrate to the US via EB-5 in-vestment linked visa route willhave to shell out more. The min-imum threshold investmentlimit is proposed to be raisedfrom $1 million (Rs6.8 crore) to$1.8 million (Rs12.2 crore).

Currently, investors arepermitted to invest a reducedsum of half a million for busi-ness operations in specified ru-ral areas or those with higherunemployment limits, knownas targeted employment areas(TEAs). Here the proposed in-vestment has been hiked to$1.35 million (Rs. 9.2 crore).

These amendments wereproposed on January 17 by theUS department of homelandsecurity (DHS) and a 90-daywindow is open for comments.Under the EB-5 programme, al-so dubbed as ‘cash for visa’, in-dividuals can apply for lawfulpermanent residence in the USif they make the necessary in-vestments and create at least 10permanent full time jobs for USworkers. They are granted con-ditional permanent residencefor themselves, spouse andchildren below 21. After twoyears, they have to apply for lift-ing of the ‘conditions’.

EB-5 offers two routes of in-vestments — one is where theinvestor directly sets up his ownbusiness — and the other via in-

granted to Indian investors, 102being for investments via re-gional centres. China, as thetop source country, leads by awide margin, with a total of8,156 visas granted to investorsfrom mainland China. In all,9,764 visas were issued in 2015— the outer cap is 10,000.

“As the Reserve bank of In-dia permits overseas remit-tance of up to $250,000 per indi-vidual per year, a family of fourfound it easier to meet the in-vestment requirement of $1million. The increase in thethreshold could lead to some lo-gistical difficulties,” says aMumbai-based consultant.DHS is also seeking to amendthe ‘active management role’requirement of the regulations.“DHS has recognised that in-vestors, particularly in pooledinvestment vehicles, may haveminimal policy formulationrights in the new business en-terprises. The proposed regula-tions indicate that it will be suf-ficient for them to play a mostlypassive role,” Nachman said.

vestments in recognised re-gional centres, which in turnsponsors business entities. Thelatter is a more popular invest-ment route. While it was to endin December, for now it has beenextended up to April 28, 2017.

David H Nachman, manag-ing attorney, NPZ Law Group,does not think that the increasein threshold will dent the num-ber of EB-5 applications. “Bonafide investors generally possessin excess of the threshold re-quired. The downside is thatthe increased funds requiredfor investor visa will give themless operating capital that theyoriginally anticipated for car-rying on their business and in-novative funding structureswill need to be adopted. We no-tice that some of our clients arecreating hospitality consultingfirms and then entering intopartnerships with other orga-nisations to allow them to beable to have the capital that theyneed in order to do the intendedinvestment,” Nachman said.

During 2015, 111 visas were

Cash for green card routemay get costlier by `̀5.4cr

Washington: Indian-Ameri-cans, including a prominent in-dustrialist who attended Do-nald Trump’s presidential in-auguration, feel bullish aboutthe prospects of Indo-US rela-tionship under the new Trumpadministration.

“India-US relationship isall set to for a new beginningunder Trump administra-tion,” said noted industrialistPrakash Hinduja, who attend-ed various inaugurationevents, including swearing inceremony at the Capitol Hill,and the presidential ball.

He had a brief interactionwith Trump during a pre-inau-guration dinner at the UnionStation on Thursday.

“He (the president) wants tostrengthen America’s ties withIndia,” Hinduja said after in-teracting with officials andleaders of the Trump adminis-tration. While there is no offi-cial record of the number of In-dian-Americans attending in-auguration related events, un-official count is estimated to bearound several hundreds.

Indian-Americans are goingto be a strong pillar of this rela-tionship, said Puneet Ahluwa-lia, finance chair of the Asian-American presidential inaugu-ral ball. “We want India-US tiesto be taken to the next level. I seea desire and commitment inthis regard from the Trump ad-ministration,” he said respon-ding to a question. PTI

Indians in USoptimistic ofnations’ ties

Yogesh Dubey TNN

Agra: S N Medical College officials here have warned se-nior students that strict action would be taken in cases re-lated to ragging. The college has put notices across thecampus stating what gesture and words amount to rag-ging. Among them are what college authorities have calledderogatory terms, such as ‘chashmish’ for those who wearspectacles and ‘kalu’ for dark-skinned persons.

The president of the anti-ragging cell at the college, DrS K Katharia, told TOI, “Any act of physical or mentalabuse including bullying and exclusion, targeted at an-other student, whether a fresher or otherwise, on theground of colour, race, religion, caste, ethnicity, gender,sexual orientation, appearance, region, nationality, lin-guistic identity or others wil count as ragging.”

“If any student is found guilty of such acts, they can besuspended, rusticated, and removed from the hostel, havetheir results withheld or face a fine up to Rs 25,000 or high-er,” Katharia added.

The college official also said that the institution didnot have a dress code for fresher students, and that se-niors should be gentle in dealing with the newcomers.“We do not force any student to cut their hair very short,or wear uniforms or buy textbooks from a particularshop. Even senior students found instructing juniors tofollow any dress code will be punished according to therules,” Katharia added. Dr Saroj Singh, principal of thecollege, said that anti-ragging teams had been formedand if any student was found harassing a junior, actionwould be taken against him or her.

‘Chashmish’, ‘kalu’jibes akin to ragging,says UP med college

A Trump supporter holds a placard bearing the US President’s campaignslogan, a call to nationalism that struck a chord with millions in the US

AFP

Analysts Negative On ̀̀ , Funds To Emerging Nations May Slow DownMayur Shetty &

Partha Sinha TNN

WRITING ON THE WALL➤ Rise in investment limits proposed from $1m to $1.8m, whichcould dent the plans of proposed immigrants from India

➤ RBI’s restrictions on repatriation and the higher thresholdlimit will result in logistical challenges

➤ Route for investing via regional centres extended to April

➤ New proposal permits investors to play a passive role in business

An official of the S N Medical College said theinstitution did not have a dress code for fresher students, and that seniors should begentle in dealing with the newcomers

�First Day, First Show:Obama Legacy Gutted, P16

Avik Das & Shilpa Phadnis TNN

US President Donald Trump talks to a priest at the National Cathedral inWashington DC on Saturday, Day Two of his tenure in the Oval Office

AFP