It is not easily comprehensible why the US administration is bent on alienating India. The latest is the demonisation of H-1B visas as being responsible for qualified Americans losing job opportunities to foreigners under the H-1B scheme, which the US claims is riven with fraudulent practices.
The US Department of Labour has suspended some of the world’s largest IT outsourcing firms, including Infosys, TCS, Wipro, and HCL, from the Permanent Labour Certification Program (PERM), accusing companies of abusing the system for foreign workers seeking permanent residency.
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After other steps, such as imposing tariffs on India, stalling on the trade agreement, announcing the intention to impose high tariffs on the pharmaceutical sector at a later date, the US Congress authorising the President to impose 100% on India for buying Russian oil, our IT sector was a potential target to extract concessions from India on a number of fronts.
In actual fact, whatever the instances of misuse of the H-1B scheme, in a larger perspective, the cooperation between Silicon Valley and Bengaluru has been a huge success story. US hi-tech giants and the largest Indian IT companies have flourished together. The fact that several US tech giants have Indians as CEOs, some of whom went to the US under the H-1B scheme, speaks for itself. Tightening the screws on India by attacking our IT sector, which created a great synergy between Bengaluru and Silicon Valley, and which has been a great story of India-US ties, was not unexpected, given the negative trends in India-US relations.
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Ratcheting up the pressure on India’s IT sector smacks of populism. The US is aware of the shortage of STEM graduates in the country. One should know the statistics of job losses of US-qualified talent because of H-1B visas to judge the real scale of the problem. Silicon Valley dominates the global IT market. Indian talent has significantly contributed to it. Can local talent fully replace Indian contribution? Why is the US leading in setting up Global Capability Centres in India – over 60% – and pocketing the IP? Clearly, Indian talent is valued by US companies.
The US Vice-President, JD Vance, who led the campaign against the H-1B scheme, has characterised those benefiting from it as “indentured servants”. India’s Ministry of External Affairs (MEA), in its unusually strong statement, has rebuked Vance by name, calling his remark “deeply offensive”. India has been taking the blows inflicted on it by the Trump administration without getting unduly ruffled in order to avoid getting into a spat with an unpredictable White House. In its latest statement, the MEA, however, has bared its teeth a little.
NASSCOM has issued a sober statement, pointing out that the H-1B programme has historically played an important role in addressing short-term skill gaps in the US and will continue to be used to address short-term talent gaps. It has also pointed out that over the years, Indian IT companies have significantly reduced their dependence on H-1B visas, while steadily expanding local hiring.
The PAN IIT Alumni India organisation, representing 23 IITs, has issued a statement urging skilled Indian professionals on H-1B visas to consider returning to India to build their careers and businesses. It has explicitly cautioned tech professionals against building their long-term futures entirely dependent on foreign immigration frameworks. It has urged them to leverage their expertise within India’s rapidly growing tech sector, arguing that the domestic constraints which once forced India’s brightest minds to move abroad – such as a lack of deep-tech infrastructure or capital – no longer exist.
Tata Consultancy Services (TCS) has said that the US suspension of the Permanent Labor Certification (PERM) green card programme will cause no material impact on its operations or client projects. Its PERM applications over the past two years being in single digits means there would be no operational disruption.
The US has proposed that universities pay USD 70,000 for every foreign student entering the optional practical training programme, which hits Indians as they constitute the largest number of foreign students in the US.
Maybe it is time now to re-assess some fundamental assumptions on which we have been building close ties with the US. We have established a Comprehensive Global Strategic Partnership with the US built on defence cooperation, technological innovation, economic ties, and a shared vision for the Indo-Pacific.
The Indo-Pacific Question
In all these areas, the basis of this Comprehensive Global Strategic Partnership has been eroded. On the trade front, after all the talk about a deal being “99%” finalised, our Finance Minister has now clarified that the negotiations have reached a plateau, and that it would now be “very, very difficult” for either side to make further concessions or demands. She acknowledged the bilateral trade imbalance, which currently favours India, but criticised the rising use of “weaponised” tariffs by the US to tackle trade deficits rather than resolving them through standard diplomatic dialogue. Recent US legislative moves allowing heavy tariffs (up to 100%) on countries purchasing significant quantities of Russian oil – including India – have created added friction and complicated the path towards a final deal, she said.
One should note, however, that despite the delay in finalising the deal and the tariff threats, Indian exports to the US have shown resilience, with sectors such as electronics, pharmaceuticals, and marine products performing well.
The US Trade Representative, Jamieson Greer, has, on his side, poured cold water over any progress on the deal by stating that it is “not imminent”. All this means that the USD 500 billion target for bilateral trade between the two countries, a goal branded as “Mission 500”, is hardly likely to be achieved by the 2030 deadline.
Technological and innovation cooperation between India and the United States has evolved from the earlier Initiative on Critical and Emerging Technology (iCET) into the TRUST framework (Transforming the Relationship Utilising Strategic Technology), with AI and Infrastructure, semiconductors and supply chains, space innovation, and quantum and bio-technology on the agenda. But US regulatory hurdles and the ITAR legislation, coupled with a deterioration in the political atmosphere, are likely to slow down cooperation in these areas.
The Few Silver Linings
It would appear that, despite all the negative trends, an effort is being made in some areas to maintain some momentum in bilateral ties. The plan for India and the US to collaborate on Indian Ocean security and infrastructure through the Indian Ocean Strategic Venture seems to be moving forward. This cooperation aims at pooling financial and technical resources to build and upgrade ports and telecommunications networks in regional nations like Sri Lanka, the Maldives, and Mauritius, as well as maritime security, digital, and tech connectivity. How far, however, this will go is most uncertain, as our experience with France and Japan shows that such cooperation in third countries has not worked.
Besides, with the US diminished interest in the Quad and the eastward-oriented Indo-Pacific concept, it is unclear why, in the western Indian Ocean, the US would be more committed to serious bilateral cooperation. India is already involved in major infrastructure and other projects in Sri Lanka, the Maldives, and Mauritius, which raises questions about the political logic of such cooperation in these countries with any third power.
Finally, the gap between the reality on the ground and the upbeat projection made in India by the US embassy of the state of our bilateral ties is apparent.
(Kanwal Sibal was Foreign Secretary and Ambassador to Turkey, Egypt, France, and Russia, and Deputy Chief Of Mission in Washington)
Disclaimer: These are the personal opinions of the author
