"H" is for High Technology Cooperation, Not H-1B Visas

By Arun M. Sukumar
Friday, March 10, 2017, 11:06 AM

Last Friday, U.S. Customs and Immigration Services announced that it would be suspending the expedited processing of H-1B visas beginning on April 3rd. Though this news has long been pushed off the front pages of U.S. newspapers by President Trump’s revised executive order limiting travel from six majority-Muslim countries, the H-1B decision continues to get top billing in papers across India, the visa program’s biggest beneficiary. For Washington, D.C. and New Delhi, this represents a pivotal moment: will India-U.S. conversations on “high technology” be taken hostage once again by the H-1B issue? The lavish political attention showered on the visa program represents all that is wrong with bilateral technology collaboration today.

The importance of H-1B visas in relations between the United States and India is due essentially to a quirk of history. Just at the time the United States had ratcheted up sanctions on India after its second nuclear explosions test in 1998, Silicon Valley saw its first tech bubble. Sanctions effectively killed any chance of government-to-government dialogue on technology cooperation, but Indian and U.S. companies were already engaged in moving their talent across borders to expand business operations. Bereft of any strategic vision, the H-1B program became an instrument to create a cadre of mid-level I.T. professionals. As research by Nikhila Natarajan of ORF indicates, the “highly skilled” workers these visa regimes were meant to attract were usually paid a median salary of $70,000 by Indian companies, comparable to that of an elementary primary school teacher in the U.S.—making the possibility of employment in the U.S. on an H-1B visa very appealing.

As a result, employees of Indian I.T. corporations today make up the largest proportion of recipients of H-1B visas. The H-1B program—and the L-1 program, which allows companies to transfer employees with “specialized knowledge” to the U.S.—have been successful in creating bridges between Indian and U.S. businesses. Yet their contribution to collaboration in research and development and strategic engagement is negligible, and has caused India to fall behind in technology innovation. On both the Indian and American side of the equation, successful bilateral technology collaboration must look beyond the H-1B program in order to tie collaboration to investment in Indian education and innovation.

This was made clear to me recently on the sidelines of a recent conference on India’s digital economy, where the Research & Development head of one of the world’s leading data analytics companies explained to me that his company’s labs in Moscow—which have a couple hundred employees—offered more value to the company than the thousands of Indian software engineers it employs in Bangalore alone. Puzzled, I asked why. The R&D chief bluntly said advancements in algorithmic efficiency and innovation were made in locations like Moscow or the firm’s location in Tel Aviv, while the India offices mostly serviced or updated finished products. With Indian expertise being relatively affordable, it makes sense to invest in “high technology” development elsewhere and hire a big team in Bangalore or Gurgaon to manage operations. In the absence of rigorous Master’s or PhD-level training programs in the country on computer science or cyber security, he said, companies have no incentive to move frontier research to India.

My acquaintance’s dilemma is shared not only by other foreign businesses, but also by the Indian negotiators who make the case for technology cooperation between India and the United States, Israel, or Russia. One diplomat instrumental in the setting up of the India-U.S. High Technology Cooperation Group (HTCG) referred to this as the problem of limited “absorptive capacity”. Foreign businesses may be keen to set up R&D bases in India, but struggle to find Indian engineers and scientists who can innovate for the world. On the other hand, Indian businesses—long content to tackle personnel-level issues like H-1B visas—have underinvested in local talent that can convince companies abroad to confidently ink partnership agreements. As a result, those platforms nurtured by the Indian government to incubate technology sharing have all but stalled.

Take the case of the HTCG and the Defence Technology and Trade Initiative (DTTI), respectively the sister India-U.S. initiatives to strengthen civilian and strategic technology collaboration between public and private players. Both emerged from high-level political engagement in the early 2000s between the Bush administration and the Manmohan Singh government in New Delhi. Negotiations that led to a bilateral civil nuclear agreement then were followed by a waiver from the Nuclear Suppliers Group (NSG) for India—which is not a signatory to the Nuclear Non-Proliferation Treaty (NPT)—to engage in nuclear commerce. Now that one “technology denial regime” (as many Indian analysts referred to the NSG) had fallen, it was assumed other export controls would follow suit. Indeed, in 2010, the Obama administration formally and publicly committed to supporting India’s membership in the Wassennaar Arrangement. Given the political context, the HTCG and DTTI were conceived as platforms to loosen export controls to India, and crucially, nudge American companies to work with their Indian counterparts in co-creating new technologies.

Yet both these initiatives have made only modest progress since their inception. At the time of writing, nine meetings of the HTCG have been held, with the group most recently meeting in 2014. In no small part due to its efforts, Indian industries today have a better understanding of U.S. licensing controls, and many export restrictions too have been lifted. However, the group has not been able to make any significant headway on promoting R&D collaboration in cyber security. The DTTI, established in 2012, has only reached agreement on two projects, neither of which can be described as gamechanging projects for overall defence ties.

What went wrong?

First, it was wrongly assumed that nuclear technology cooperation would spill over into other areas. At the time of signing the India-U.S. civil nuclear agreement, India had a fully self-sufficient and highly advanced nuclear power program. This is not so for digital or “cyber” technologies. Political goodwill cannot transform the nature of high technology cooperation without investments in tertiary education in India and a willingness by U.S. companies to create intellectual property with their Indian partners. Investments in education should come from the Indian government, but U.S. businesses can play a crucial role in building the capacity of instructors, and strengthening R&D facilities available in Indian campuses.

Second, the political impact of the L-1 and H-1B visa programs has been underestimated. Indian I.T. corporations are today the biggest H-1B visa employers, and have held bilateral collaboration in this field captive to their business concerns. Looking to sell their finished products in India, U.S. companies too have been content with recruiting Indian talent under the immigrant visa regime. Neither U.S. nor Indian businesses currently have an incentive to look beyond the regime—but the recent decision to suspend expedited H-1B processing may change this.

And third, India and the United States have very different cybersecurity needs. Bilateral technology cooperation, thanks to the way in which H1B visa regime has been utilised, has so far focused on creating Indian supply chains to service U.S. products, while American investment in one of the world’s fastest growing digital economies has sputtered. The Indian digital ecosystem is characterised by pervasive insecurities, due to a proliferation of cheap handheld devices, poorly tested applications, and the limited ‘cyber hygiene” of users. High-end products developed in Silicon Valley do not fulfil Indians’ cybersecurity needs. The H1B visa system is (correctly) agnostic about the location of skilled human resources, but also ignores the disparities in the digital economies that it brings together.

President Trump’s policies on immigration and H-1B visa reform present an opportunity for both countries to begin a serious conversation on high technology cooperation. This dialogue should address the following questions:

  1. Who should be eligible for H-1B visas?
  2. What technologies should be promoted under the visa programme?
  3. Should visa sponsorships be tied to investments in R&D, both at home and abroad?
  4. Can both governments offer a “guiding document” to encourage the growth of certain technology sectors under the H-1B regime?
  5. Can Indian and American universities collaborate to build research labs and capacity in India?

Last week’s developments will exert pressure on New Delhi to bring the visa issue to the top of the agenda when President Trump and Prime Minister Narendra Modi meet this summer. Fortunately, the Indian government appears to be resisting efforts to make this the sole focus of high-level engagement. For its part, the Trump administration, which has legitimate concerns over the misuse of visa regimes like H-1B, should explore how they can be channeled to strengthen technology cooperation in the HTCG.