Nishith Desai Associates Legal and Tax Counselling Worldwide [email protected]www.nishithdesai.com VAIBHAV PARIKH VAIBHAV PARIKH A PRESENTATION ON MOVEMENT OF NATURAL PERSONS MOVEMENT OF NATURAL PERSONS UNDER THE GATS IN UNDER THE GATS IN COMPUTER AND RELATED SERVICES COMPUTER AND RELATED SERVICES ON BEHALF OF NASSCOM NASSCOM BY
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Nishith Desai Associates Legal and Tax Counselling Worldwide [email protected] VAIBHAV PARIKH MOVEMENT OF NATURAL PERSONS UNDER.
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INDIAN SOFTWARE EXPORTS: INDIAN SOFTWARE EXPORTS: DELIVERY MODELSDELIVERY MODELS
Source:www.nasscom.org
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Delivery 1999-00 2000-01 2001-02 (Projected)
Onsite 57.4% 56.1% 47.3%
Offshore 34.7% 38.6% 48.6%
Products and unclassified
7.9% 5.3% 4.1%
Total (US$ Billions)
2.65 6.2 7.7
NASSCOM
BIRD’S EYE VIEWBIRD’S EYE VIEW
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ServicesGATS
Mode 3Mode 1
Mode 4
ProductsGATT
Productized services
Servicized Products
NEED FOR MOVEMENT OF NEED FOR MOVEMENT OF NATURAL PERSONSNATURAL PERSONS
• Globalisation of economic-activities and technological developments
• Facilitation of cross-border trade in services• Leveraging on the expertise and skill that
Indian software professionals possesses in order to reach out to a global market
• Direct contact between supplier and consumer necessary for effective services
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ISSUES / CONSTRAINTSISSUES / CONSTRAINTS
• Immigration related issues
• Inadequate recognition of qualifications, experience and training
• Differential treatment of foreign service personnel
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IMMIGRATION ISSUESIMMIGRATION ISSUES• Visa Requirements
– Prior adequate search in national markets– Wage parity requirement
• Negates cost-based advantage of developing countries
– Differentiation in processing permits based on the level of employment
• Faster to process intra-company transferee permits for higher level employees than permits for software professionals system analysts and database consultants
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IMMIGRATION ISSUESIMMIGRATION ISSUES• Visa Requirements (contd.)
– Cumbersome procedure for issuance of work permits
• Time frame of 2 weeks to 3 to 4 months, or even longer!
– Quota restrictions• H-1B visa quota – Cap on economic expansion
– Restrictions on transferability and mobility– Limitation on duration of stay
• Economic Needs, local market needs test
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INADEQUATE RECOGNITIONINADEQUATE RECOGNITION• Foreign countries find the educational and
work experience / training qualifications of software engineers to be insufficient– Eg. UK – Five years of experience or
graduation and two years of senior post-graduation work experience
– Eg. U.S. – 3 years professional experience
• Issue: Indians may be sufficiently skilled without satisfying the above criteria
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DIFFERENTIAL TREATMENTDIFFERENTIAL TREATMENT• Tax implications on temporary foreign
service providers– Social security taxes in the US – no tax credit in
home country – erodes the cost advantage
• Government procurement policies favour domestic suppliers – eg. data processing
• Government approval required– Setting up operations – nature of entity and
establishment of local offices– Remittance of foreign exchange
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DRAWBACKS / LOSSESDRAWBACKS / LOSSES
• Loss of business opportunities
• Higher costs for the customers / consumers
• Uncertainty, delays in deputing personnel
• Difficulties in transferring between sites in host country
IMPROVING THE STRUCTURE OF IMPROVING THE STRUCTURE OF GATS COMMITMENTSGATS COMMITMENTS
• Horizontal Commitments– Specifically include individual professionals– Clear eligibility criteria to be determined– Uniformity in definitions– Further expansion to include middle and lower
level professionals in the category of “other persons” or “specialists”
Source: India’s proposal to WTO
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IMPROVING THE STRUCTURE OF IMPROVING THE STRUCTURE OF COMMITMENTSCOMMITMENTS
• Sectoral Commitments– Developed countries to make commitments in
all sub-sectors for computer and related services.
• Visa requirements– Transparent visa application procedures– Simplify application procedures– Less stringent norms for entry and stay– Remove labour conditions for specialty occupations
(US)– Remove labour market test requirement for all
specialists (Australia)– Establish guidelines for wage parity– Impose conditions to prevent exploitation of foreign
workers– De-link temporary visas from permanent visas