H-1B changes to have little effect on Indian remittances: Barclays
What's the story
A recent Barclays research report has estimated that the changes in H-1B visa rules in the US will have a minimal impact on remittances sent by overseas Indians. This comes after US President Donald Trump announced major changes to the H-1B visa program, including a one-time fee of $100,000 for new visas and a wage-based selection process.
Rule changes
Remittance losses unlikely to exceed $5 billion
The new H-1B visa system replaces the lottery-based selection with a wage-based one, giving high-skilled and high-paid applicants multiple entries in the selection pool. The Barclays report acknowledged that while these new rules could lead to job losses and impact livelihoods, their effect on remittances is unlikely to exceed $5 billion out of a total of $83 billion.
Market dynamics
Emergence of global capability centers
The Barclays report also highlighted the emergence of global capability centers (GCCs), many of which are US-headquartered firms. These GCCs are likely to continue bolstering services exports instead of slowing them down. Despite the changes in H-1B visa rules, India remains a major player in the IT and IT-enabled services sector, with 62% of sectoral exports going to the US.
Export influence
Canada and Germany eye Indian talent
The Barclays report further stressed that the overall growth of the industry has not been primarily driven by US employment. This indicates that the H-1B overhaul is unlikely to have a major impact on India's overall services export landscape. The study also noted that countries like Germany and Canada are now looking to attract high-skilled Indian talent, which could redistribute movement in the medium term.