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Wednesday, 23 September 2015 00:00
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Anup's edit

Nasscom gives the US government food for thought


By and large, when it comes to negotiations with the US, India has always been on the backfoot. US pharma firms, for instance, routinely trash India’s patent laws and estimates are regularly put out on how much India’s poor IPR costs US industry each year. Nasscom has done the country a big favour by, on the eve of Prime Minister Modi’s US visit, putting out a report giving details of how Indian IT firms are helping the US and how, in return, the US government treats them by levying high taxes and unconscionable social security levies. If nothing else, this should help the government during its negotiations with the US on, for instance, a totalisation agreement to avoid double taxation of income with respect to social security taxes.

So, the report points out that while the Indian tech industry has invested $2 billion in the US between FY11 and FY13—and $8.2 billion in operational expenditure in FY13 alone—it has created 4.1 lakh jobs in the US in FY15 alone, of which 3 lakh are for US nationals and green card holders. Between FY11 and FY15, a total of $20 billion have been paid by way of taxes to the US government and another $6.6 billion by way of social security contributions—which, since they will not retire in the US, Indian software professionals have no way of ever recovering. Apart from the fact that Indians cannot possibly be taking US jobs if Indian firms are creating jobs for US citizens, the report points to the fact that while overall US unemployment levels were 6.2% in 2014, the number was 2.7% in the tech sector—indeed, with a projected shortfall of 4.5 lakh computer professionals by 2022, India is helping the US fill this gap.

Given that the US has signed totalisation agreements with 25 countries that include 20 European nations, Australia, Chile, Japan, South Korea and Canada, it is inexplicable that it has not signed a similar one with India—given how the Digital India plan will also offer big opportunities for US firms, Modi would do well to push the US side to finalise this soon. And it would help if other Indian industries followed Nasscom’s example and clearly calculated the losses they face due to unfair US practices/laws.


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