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Changes in UK migration laws may raise costs for Indian cos

Even as the Indian diaspora in the United Kingdom (UK) is readying to give a red-carpet welcome to Prime Minister Narendra Modi during his maiden trip to the UK in mid-November, India Inc is keeping a keen watch over the ongoing developments relating to migration laws.

Some expected changes, such as an increase in overall minimum threshold salary for Tier-2 visas (meant for skilled workers, including those on inter-company transfers) and a skills levy, are likely to add to the cost of India companies which have business operations in the UK. The Tier-2 route largely consists of non-EU work migration.

Cutting down on net migration is a key focus area of the UK government. The Migration Advisory Committee (MAC), which has been set up to examine the mechanics of Tier-2 immigration system, is expected to deliver the bulk of its proposals by year-end.

In its July report, MAC has concluded that there is a case for increasing the overall minimum threshold for Tier 2 (General) category of visas. Following this report, a newsletter issued by Fragomen, a global immigration consultancy firm, had stated: “The MAC’s reasoning for this conclusion is that the current amount, £20,800 (or nearly Rs 20.5 lakh at current exchange rate), was calculated in 2009 when the skill requirement for migrant workers was much lower. This could mean a substantial increase in the salary threshold to £31,000 (Rs 30.5 lakh) or £39,000 (Rs 38.4 lakh). However, the MAC has urged the UK Home Office to be cautious over any decision to raise the minimum salary for skilled foreign workers pending the completion of the MAC’s review of the Tier 2 category later this year.”

The MAC found the £41,500 threshold for long-term intra-company transfers to be appropriate, but added in its report: “There may be a rationale for increasing this threshold if the government’s aim is to reduce economic migration.” A UK-based immigration specialist says: “The minimum salary thresholds for Tier 2 have not yet been announced, as consultations which MAC is having with a cross section of stakeholders are not complete. Following the first round of consultations, MAC suggested it would be more appropriate to increase rates across individual jobs and sectors via ‘standard occupational classification (SAC)’ codes, rather than have a flat one-size-fits-all approach.”According to a CII-Grant Thorton report, “India meets Britain: Tracking the UK’s top Indian companies”, about 800 Indian companies operate, invest and sustain 110,000 jobs in the UK. However, a break-up of those who are migrants from India and those who are resident employees (UK citizens) isn’t available (see graphic). Indian companies having subsidiaries overseas tend to depute some employees from India.The top fastest growing Indian companies (36 in all) in the UK generated £22 billion of turnover during 2014. The sectors represented are wide ranging and include pharmaceuticals, chemical, technology, telecom, automotive and manufacturing.

MAC has also over the past months also held consultations with various Indian companies and associations such as Infosys, TCS, Nasscom and CII. “Currently, all suggestions and proposals are being analysed by MAC, which has held several consultations with the industry. CII’s members (Indian companies in the UK) also had a consultation with the MAC expressing their concerns, which primarily focused on separating the issue of migration and mobility, and the inability of Indian companies to find relevant and sufficient skills in the local talent pool. A formal submission was made to MAC post these consultations,” says a CII spokesperson. For now, India Inc is waiting and watching.

This article appeared in The Times of India on 08th October, 2015.