Modi govt to reap political gains from action against Mallya, Subrata Roy

It is perhaps easy to miss the coincidence of two developments taking place in quick succession this week, but their significance in national politics should not be underestimated. Nor should there be any celebrations over an early resolution to the problems that those developments are seeking to address.

On Monday, the Supreme Court ordered the auction of the Aamby Valley property of the Sahara supremo, Subrata Roy, to help recover from him dues that market regulator, the Securities and Exchange Board of India (Sebi), estimates to be over Rs 47,000 crore, including interest. Of this amount, the group has so far paid back Rs 11,477 crore.

A day later, the United Kingdom (UK) authorities started extradition proceedings against Vijay Mallya, who allegedly owes over Rs 9,000 crore to banks in India and has been staying away from India for the last 13 months. After the UK Secretary of State certified that extradition proceedings could begin, the London police arrested Mallya and produced him before a local court, which granted him conditional bail.
Purely from an economic governance point of view, these steps mark just the beginning of what would certainly be a long process of recovering dues from Subrata Roy and Vijay Mallya. But that the process has begun augurs well for a country where action against malfeasance is rare and when the process does start, it is excruciatingly slow. And worse, when the process ends after many years, the accused often get away with relative ease.

For instance, it would only be on April 27 that the Supreme Court is expected to get a valuation report for Aamby Valley, a luxury township in Maharashtra. Even if the auction process starts on that day, it would take many more weeks before the sale of the asset takes place and the money is recovered.

Similarly, Mallya will get 14 days to appeal against any decision by the local court to refer his extradition case back to the UK Secretary of State (equivalent of the Indian external affairs minister) to take a final view on the Indian government’s plea for extradition. The next hearing of the local court is scheduled for May 17.

So, theoretically, if a decision on pursuing the extradition is taken by the local court on that day, Mallya can appeal before the high court before May 31. If that appeal is turned down by the high court, Mallya has another 14 days to plead before the Supreme Court for a review. Only after that route is exhausted, the final decision on the plea for Mallya’s extradition would be taken. The UK Secretary of State will have four weeks to take a call on this after giving Mallya a chance to explain his case. So, Mallya’s extradition is not likely before July 2017.

Remember also that UK elections have been called and they are to be held on June 8. So, a final decision on Mallya’s extradition would be taken by a newly elected government, if not a new UK Secretary of State. And who knows, the issue of Mallya’s extradition can become an emotive political campaign issue in the run-up to the elections and remember that the UK has a sizeable number of voters of Indian origin.

In India, however, the Modi government is likely to reap significant political gains from the action of the Supreme Court against the Sahara property in Maharashtra and the Indian government’s success in initiating the extradition process against Mallya. It is likely that the Modi government would cite both the developments as its success in taking to task Big Money that has been accused of malfeasance.

Remember that tackling crony capitalism and black money was one of the 2014 poll planks riding on which the Bharatiya Janata Party (BJP) formed its government. So far, there have been a lot of noise about black money, but this is the first big instance where in one week and on two successive days action has begun on recovering dues from two big names of Indian industry whose political connections also have been controversial. It is not surprising that the BJP has already swung into political action by reminding people about the virtual absence of credible action against them by the previous government.

Critics would of course argue that the credit for the action against Subrata Roy and Vijay Mallya should not go to the government but to the courts – Supreme Court against Roy and the UK court against Mallya. But that argument does not wash as the fact is that it is because of the insistence of Sebi under the BJP-led government that a stage has reached where Roy’s premiere township complex is going to be auctioned to recover dues from him. Similarly, the efforts initiated by the Union finance ministry under the Modi government have been primarily responsible for ensuring the certification of extradition proceedings against Mallya by the UK government – a process that has now led to his arrest, release on conditional bail and the start of the extradition proceedings under a court’s supervision.

It is only a matter of time before the Modi government would go to town with these two cases as its achievements against financial irregularities committed by big business. There is a good chance that these steps would be used to further enhance the image of the Modi government as a crusader against crony capitalism and malfeasance. The Congress or other Opposition political parties would have very little to counter such a campaign.

Modi govt to reap political gains from action against Mallya, Subrata Roy

SC’s Babri ruling might revive interest in Ram temple, help BJP in 2019 LS

In what was widely interpreted as a jolt to presidential ambitions of senior Bharatiya Janata Party (BJP) leaders LK Advani and Murli Manohar Joshi, the Supreme Court today ordered that the two, along with several others, be prosecuted for criminal conspiracy in the Babri Masjid demolition case.

The court, however, said that there shall be no fresh trial, no transfer of the judge conducting the trial until the entire trial concludes and the sessions court will complete the trial and deliver the judgement within a period of two years.
The renewed hearings in the case is set to bring the issue of Ram Janmabhoomi on the forefront of national consciousness. It offers Sangh Parivar outfits like Vishva Hindu Parishad (VHP) and Bajrang Dal to come into prominence in the run up to the 2019 Lok Sabha polls and keep the pot simmering on the issue.

It will also enable not just the BJP but also Prime Minister Narendra Modi and his government to distance themselves from the issue and let Sangh Parivar take the lead. The VHP today demanded that Parliament pass a law to facilitate early construction of a Ram temple at the disputed site.

Apart from Advani and Joshi, trial against union minister Uma Bharti will also be initiated. In response, Bharti said she is proud that she was part of the movement and will sacrifice her life for the construction of a grand Ram temple at Ayodhya.

Finance Minister Arun Jaitley rejected the possibility of Bharti quitting the Modi cabinet. Several in the BJP disagreed with the assessment that the case was a jolt to those named. Instead, one leader said, those named will be celebrated in the months to come for their role in the movement.

The BJP core committee, comprising most of its senior leaders, including party chief Amit Shah and Jaitley, met today. It discussed the Supreme Court order, among other issues. Party leaders claimed the meeting had been decided in advance and not called in response to the SC order.

Apart from Advani (89), Joshi (83) and Bharti (57), others to be tried include Rajasthan Governor Kalyan Singh. The SC noted that Singh, during whose tenure as chief minister of Uttar Pradesh the disputed structure was razed, is entitled to immunity under Constitution as long as he remains in gubernatorial position.

It, however, said the sessions court will frame charges and move against him as soon as he ceases to be Governor. This can only mean that the case will be long drawn and cannot be completed in the two year time frame.

Others to be tried include Vinay Katiar, Sadhvi Ritambara and Vishnu Hari Dalmia, all of whom were being tried at Rae Bareli. Other VIP accused Giriraj Kishore and VHP leader Ashok Singhal have died.

The Central Bureau of Investigation will need to frame charges against Advani, Joshi and others under Indian Penal Code section 120B, that relates to conspiracy, before the court starts examining over 200 witnesses. Several of these witnesses have died.

The SC bench comprising Justices PC Ghose and R F Nariman transferred proceedings against Advani and Joshi from a Rae Bareli court to the Court of Additional Sessions Judge (Ayodhya Matters) at Lucknow.

The court, in its 40-page judgement, termed the Allahabad High Court’s February 12, 2001 verdict dropping conspiracy charge against Advani and others as “erroneous”. The court also criticized CBI for the delya of 25 years in the trial.

Opposition parties, including the Congress, welcomed the SC order. Rashtriya Janata Dal chief Lalu Prasad alleged the Supreme Court order was a “well-thought-out politics” of the Prime Minister to remove L K Advani’s name from the Presidential race. “It is well known that the CBI does what the government desires,” the RJD chief claimed.

However, party sources said neither Advani nor Joshi were being considered as BJP’s nominees for the presidential post.

SC’s Babri ruling might revive interest in Ram temple, help BJP in 2019 LS

British PM May calls for early election

British Prime Minister Theresa May called on Tuesday for an early election on June 8, saying she needed to strengthen her hand in divorce talks with the European Union by bolstering support for her Brexit plan.

Standing outside her Downing Street office, May said she had been reluctant to ask parliament to back her move to bring forward the poll from 2020. But, after thinking “long and hard” during a walking holiday, she decided it was necessary to try to stop the opposition “jeopardising” her work on Brexit.

Some were surprised by May’s move — the Conservative prime minister has repeatedly said she does not want to be distracted by campaigning — but opinion polls give her a strong lead and the British economy has so far defied predictions of a slowdown.
Growth is faster than expected, consumer confidence is high and unemployment low, but the economy may be poised to pass its peak as consumers start to feel the strain from rising prices.

What’s next?

British Prime Minister Theresa May on Tuesday called for an early election on June 8. Here are the steps needed before the vote happens.

HOW WILL SHE CALL AN ELECTION?

Under the Fixed-term Parliaments Act, passed in 2011, a motion for a new vote ahead of schedule needs to be carried by two thirds of the 650 seats in the House of Commons, including vacant seats. This means that the government needs 434 votes to call the election. May said that she would introduce a motion to Parliament on Wednesday. If it is passed, Parliament will come to an end 25 working days before the date of the general election which, accounting for public holidays, will be May 3.

May’s Conservatives hold 330 seats in the chamber, and the opposition Labour party 229. Labour has said that it will vote for the election, so the combined 559 votes would be enough to pass the motion if all lawmakers of both parties follow the party line.

WHY DID MAY CHANGE HER MIND?

Theresa May has previously said that Britain needs stability rather than a new election, but on Tuesday she implied that division in Westminster was undermining that stability already. May’s position may also have been influenced by the polls.

WHAT DOES IT MEAN FOR BREXIT?

If May wins the election, her position would be strengthened at home and in negotiations with the 27 other members of the EU. With a large majority, May would be less beholden to extreme eurosceptics inside the Conservative Party while winning a personal mandate would strengthen her position as prime minister.

By calling one in June, May could win more space domestically as the next British election would not be due until 2022.
Sterling rose to a four-month high against the US dollar after the market bet that May would strengthen her parliamentary majority, which Deutsche Bank said would be a “game-changer” for the pound. But the stronger pound helped push Britain’s main share index to close down 2.3 per cent, its biggest one-day loss since June 27, days after Britain voted to leave the EU.

Gold and stocks jumped and the US dollar fell on Tuesday, adding to investors concern about geopolitical instability. “It was with reluctance that I decided the country needs this election, but it is with strong conviction that I say it is necessary to secure the strong and stable leadership the country needs to see us through Brexit and beyond,” May said.

“Before Easter I spent a few days walking in Wales with my husband, thought about this long and hard, and came to the decision that to provide that stability and certainty for the future that this was the way to do it, to have an election,” she told ITV news.

Britain joins a list of western European countries scheduled to hold elections this year. Votes in France in April and May, and in Germany in September, have the potential to reshape the political landscape around the two years of Brexit talks with the EU expected to start in earnest in June.

A survey conducted after May’s announcement put her Conservative Party 21 points ahead of the main opposition Labour Party. The ICM/Guardian poll of 1,000 people put Conservative support at 46 per cent, with Labour on 25 per cent and the Liberal Democrats on 11 per cent. May’s personal ratings also dwarf those of Labour leader Jeremy Corbyn, with 50 per cent of those asked by pollster YouGov saying she would make the best prime minister. Corbyn wins only 14 per cent.

May is counting on winning the support of British voters, who backed Brexit by 52-48 per cent. Some Britons questioned on social media whether they wanted to cast yet another ballot less than a year after the June referendum and two years after they voted in the last parliamentary poll.

The EU welcomed a snap British election that one of its leaders likened to a Hitchcock plot twist, but there was conspicuously little talk in Brussels of the vote halting Britain’s exit from the bloc. Instead, EU officials echoed Prime Minister Theresa May’s hopes that a parliamentary poll on June 8 could strengthen her own hand in managing the Brexit negotiations which are due to start around the same time.

British PM May calls for early election
Business groups largely welcomed the move, while expressing concern that the government’s focus may stray away from the economy, which May said had defied “predictions of immediate financial and economic danger”.

Underlining divisions the vote is unlikely to mend, however, Nicola Sturgeon, first minister of the Scottish government, described the decision as a “huge political miscalculation” that could help her efforts to hold a new independence referendum.

In Brussels, European Council President Donald Tusk, who is running the negotiations with Britain, said the election was a Brexit plot twist worthy of Alfred Hitchcock — the late film director known as the master of suspense.

Before holding the early election, May must win the support of two-thirds of the parliament in a vote on Wednesday, which looked certain after Labour and the Liberal Democrats said they would vote in favour.

Labour’s Corbyn welcomed the election plan, but some of his lawmakers doubted whether it was a good move, fearing they could lose their seats.

British PM May calls for early election

RBI raises provisioning on telecom loans

In an unusual directive, the Reserve Bank of India (RBI) on Tuesday asked banks to provide higher provisioning for good loans, given to stressed sectors, starting immediately with loans given to the telecom sector.

At present, the RBI mandates banks to provide 0.4 per cent as provision for a good loan as ‘regulatory minimum’, indicating the provisions could be higher.

The RBI’s singling out of the telecom sector is particularly interesting. In its various publications, most notably in the Financial Stability Report (FSR), the RBI has said five sectors – infrastructure, steel, textiles, power and telecom – have contributed to more than 60 per cent of bank stress. Steel, power, transport and other infrastructure sectors have created a huge problem of non-performing assets (NPA) to banks.
The telecom industry had outstanding debt of nearly Rs 4 lakh crore, incurred mainly on account of payments for spectrum, spectrum usage charges and other levies. The beleaguered industry had written to the Department of Telecom apprising it about the financial situation. As of September 2016, the total debt of listed telecom companies was at Rs 2,14,477 crore.

Udit Kariwala, senior analyst, financial institutions, India Ratings, said the stressed assets in the telecom sector is estimated at about Rs 1,00,000 crore. Most of the loans are still shown as standard assets though they show all signs of stressed assets, he added. For restructured advances, which are treated as standard assets, banks have to make a provision of five per cent.

The RBI’s cautioning on the telecom sector could be seen in that context. The interest coverage ratio of the sector, presently, is less than one, the RBI said. A ratio of less than one indicates that companies are not able to service their full interest from the operating profit, a clear indication of high stress. In addition, the companies are also reporting “stressed financial conditions,” the RBI noted.

“We are glad that the RBI has taken note of the financial issues of the industry. The stress level has caused major financial problems to the companies and we feel that the time has now come that the government addressed this issue,” Rajan Mathews, Director General, Cellular Operators Association of India said.

The central bank’s notification said the bank boards should review the telecom sector loan by June 30, “and consider making provisions for standard assets in this sector at higher rates so that necessary resilience is built in the balance sheets should the stress reflect on the quality of exposure to the sector at a future date.”

“Besides, banks should also subject the exposure to the sector to closer monitoring,” the RBI notification said.

The central bank has been warning about the telecom sector for quite some time.

For example, the FSR, published in December 2015, showed that telecom sector was still relatively healthy compared with power and transport, which saw restructured assets and bad debts in double digits.

In the December 2016 report, however, the RBI started getting concerned about the high leverage in the telecom sector.

While reviewing the sector, the banks should review quantitative and qualitative aspects like debt-equity ratio, interest coverage ratio, profit margins, ratings upgrade to downgrade ratio, sectoral non-performing assets/stressed assets, industry performance and outlook, legal/ regulatory issues faced by the sector, etc, Besides, sector specific parameters should also be taken into consideration, the notification said.

The higher provisioning for standard loans would be applicable to all sectors that are in stress, the RBI said. However, the central bank did not specify the extent of increase in provisioning.

“Banks shall put in place a board–approved policy for making provisions for standard assets at rates higher than the regulatory minimum, based on evaluation of risk and stress in various sectors,” the RBI’s notification said.

The provisioning goes up as the company fails to service the interest on its loans within 91 days. The RBI did not specify how much of additional provisioning should be made by banks, but said it should be sector-specific and should be reviewed at least on a quarterly basis.

RBI raises provisioning on telecom loans

TCS Q4 profits up 4.2% to Rs 6,608 crore

Tata Consultancy Services (TCS), India’s largest software exporter, said on Tuesday both fourth quarter (Q4) profits and revenues grew 4.2 per cent to Rs 6,608 crore and Rs 29,642 crore, on the back of improved digital business, but currency volatility impacted its margins in the three-month period.

TCS lost 1.3 per cent in revenue and 40 basis points in margins because of rupee volatility during the quarter. Subdued growth in key verticals such as retail and banking, financial services and insurance (BFSI) pushed the company to post numbers below analyst estimates. TCS’ constant currency revenues grew one per cent — lower than analysts’ expectations of 1.5 to 2 per cent. Bloomberg consensus estimates had pegged the company’s revenues and net profit at Rs 29,893 crore and Rs 6,668 crore, respectively.

Analysts say margins would be under pressure for TCS as business remains subdued.
“It has been a moderate quarter for TCS. The new chief executive officer (CEO) has just come in and he will not cut the margin growth rate in the first quarter, but it will be difficult to achieve 26-28 per cent. This year also the margin is reported at 25.7 per cent. Retail has been softer, as a lot of stores are shutting down in the US. BFSI is impacted by Brexit,” said Madhu Babu, information technology (IT) analyst at brokerage Prabhudas Lilladher. “The industry has accepted seven to eight per cent. Considering that he has not cut the margins, the earnings cut will not be significant. The stock may remain what it is.”

However, TCS CEO Rajesh Gopinathan, who delivered his first results for TCS after taking charge as CEO, said he was optimistic of customers increasing their IT spending, despite concerns over visa restrictions.

graph “As we look at FY18, N G Subramanian (chief operating officer) and I spent the first two months visiting customers primarily in North America, Europe, and APAC (Asia-Pacific). A very common theme that we are hearing from all of them is a very strong focus on digital and continuing investments and technology transformation agenda, which play well into TCS’ core strengths,” Gopinathan told reporters.

“We continue to stay focused on digital. We are focusing on three themes — agile, cloud and automation — and we see these playing out. We see FY18 incrementally positive and quite confident about demand outlook. Retail and high-tech verticals have been soft. BFSI is expected to bounce back,” he said.

Gopinathan’s positive outlook has been contrary to executive comments at rival Infosys, which sees macro-economic challenges, technology shifts and countries such as the US pushing for local jobs slowing businesses. TCS does not give revenue forecasts.

TCS grew 8.5 per cent in dollar terms in 2016-17 on a larger base, going past Infosys, which grew 7.4 per cent. The firm said FY17 profits grew 8.6 per cent to Rs 26,289 crore on revenues of Rs 1,17,966 crore, which, too, grew 8.6 per cent.

Infosys has projected a growth rate of 6.5-8.5 per cent in FY18, indicating that the company is back to its lower growth numbers before Vishal Sikka, its chief executive, was hired from business software maker SAP to transform the company.

TCS and its smaller rivals have maintained that any push for visa restrictions by the US and other countries would be met by hiring local engineers.

“We are hiring locally in all geographies. The last few years’ hiring onsite has been higher. We are going more and more towards a less visa-dependent business model,” said Ajoyendra Mukherjee, head of human resources, TCS. “As far as wages are concerned, we will have to wait and see. We will tweak our model in order to ensure that we remain compliant and at the same time meet customer demands.”

The TCS stock closed Rs 12.2 or 0.53 per cent down at Rs 2,308.65 on Tuesday on the BSE, when the Sensex was down 94.56 points, or 0.32 per cent, to close at 29,319.

TCS Q4 profits up 4.2% to Rs 6,608 crore

IMD’s normal monsoon forecast lifts business sentiment

The monsoon is likely to be just normal at 96 per cent of the Long Period Average (LPA) this year for the second year in a row, the India Meteorological Department (IMD) said on Tuesday, giving rise to expectations of three to four per cent farm gross domestic product (GDP) growth, which would fuel rural demand and ease food inflation.

However, an assessment of the specific impact of the monsoon on the economy would have to wait a while, as the timing of the monsoon arrival and its distribution would be key, experts said.

The IMD attributed the projection to a weakening of El Niño and the Indian Ocean Dipole (IOD) turning positive. Both factors are seen combining to boost the southwest monsoon, though doubts linger over the intensity of the rains. The IMD predicted a 38 per cent chance of near-normal showers. The forecast has a model error of five per cent. The IMD, which released its initial forecast for the four-month monsoon season, also said preliminary indications showed this year’s rains would be well distributed.
Detailed forecasts on regional distribution will be made in early June, by when more information on El Niño and the IOD is available. Though the impact of agriculture on the economy has come down over the years, it still is an important factor to the rural economy and its cascading effect on India Inc’s balance sheet.

Sunil Kataria, business head, India and SAARC, Godrej Consumer Products, said, “The forecast of a normal monsoon is a positive. Rural India is a key driver of fast-moving consumer goods growth and rural depends on monsoon since it is linked to farm output and income. The projection of a normal rainfall will, therefore, help in driving up rural consumption and accelerate overall growth.”

Ajay S Shriram, chairman and senior managing director, DCM Shriram, a fertiliser major, hoped that the IMD’s prediction will further brighten the prospects of agriculture and lead to healthy consumption of agri inputs like fertilisers. El Niño is a warming of sea surface temperature along the equatorial Pacific Ocean, while in the IOD, sea surface temperature in the western Indian Ocean becomes alternately warmer and cooler than the eastern part. “The latest forecast indicated a weak El Niño developing during the later part of the season, while positive IOD conditions are likely to be favourable for a normal monsoon,” IMD Director-General K J Ramesh said.

The country had back-to-back droughts in 2014 and 2015 and normal monsoon in 2016.

Renowned agriculture scientist M S Swaminathan said on Tuesday, “Normal monsoon will certainly help achieve the production goals. Better price for the produce and marketing opportunities are equally important.”

Shobhana Pattanayak said that the government hopes for “a successive good foodgrain production” in 2017-18 after record of around 272 million tonnes in 2016-17.

Soumya Kanti Ghosh, chief economic advisor of the State Bank of India group said the agricultural GDP is most likely to be in the range of three to four per cent, a tad lower compared to the FY17 expectations of over four per cent, if rainfall remains normal. “Even in the case of deficit rainfall, there are instances where agri-GDP has, in fact, expanded (in 2009) and grew slightly more than normal rainfall (in 2010 and 2011) years,” he said.

The three to four per cent farm growth would have a cooling impact on the Consumer Price Index (CPI)-based inflation. “While other factors such as the rise in minimum support prices and supply demand dynamics for perishables would be important, we expect average CPI inflation to remain stagnant at 4.5 per cent in FY18,” said Aditi Nayar, senior economist, Icra. The monsoon is considered normal if rainfall during the June-September season is 96-104 per cent of the LPA, the average seasonal rainfall in the country in the last 50 years, estimated at 89 cm. Rainfall below 90 per cent of the average is considered deficient, above normal at 105-110 per cent, and excessive above 110 per cent.

The IMD issues its first monsoon forecast in April and updates it in June. The department, which used a combination of statistical and ocean atmospheric models, said both showed rainfall this year would be normal. “Earlier, there was a more than a 50 per cent chance of El Niño developing, which has now gone down,” Ramesh said. Private weather forecasting agency Skymet has said rainfall this year will be below normal at 95 per cent of the LPA.

“It is too early to make any firm predictions as the actual rains will arrive almost two months later,” said Madan Sabnavis, chief economist, CARE Ratings. He said factors like arrival of the rains and their distribution would be key.

Mahendra Dev, director of the Indira Gandhi Institute of Development Research, said that the predictions were positive but there was a need to await a clearer picture. Nayar said reservoir storage is currently at around 31 per cent of full capacity, in line with the level in 2015.

With a 14 per cent shortfall in monsoon that year, reservoir storage had peaked at a modest 61 per cent in September 2015, and subsequently fallen to 25 per cent at the end of the fiscal year. Partly on account of the unfavourable rainfall and reservoir levels, the gross value added for crops had contracted by 2.2 per cent during FY16.

“Therefore, the volume, timing and dispersion of monsoon rainfall in 2017 would be quite crucial,” Nayar said.

D K Joshi of CRISIL said, “In many El Niño years in the past, the rainfall has been normal. So, more than the prediction, the actual quantum of rainfall and their distribution matters the most. With the current prediction, however, sowing of short duration crops would be a strategic decision of farmers to deal with deficient rainfall, if any.”

Last year, the IMD had predicted rainfall to be above normal – more than 106 per cent of the LPA – in its first forecast. Actual rainfall was around 97 per cent of the LPA.

What a normal monsoon means for India
Agriculture production grows, reducing the food inflation rate and lowering import of pulses and oilseeds. Economic growth strengthens
Less drawdown of water levels in reservoirs, fewer instances of drinking water crisis
Improved power situation due to adequate water in hydelpower projects, less use of pumps for irrigation
Overall rural consumption gets a boost due to rising farm and non-farm wages
Sales of auto, FMCG, fertiliser, seeds, tractor companies positively impacted
Less pressure on the RBI to raise interest rates
Low inflation further fuels demand in the housing and auto sectors
Drought or rainfall deficiency in less number of areas means the burden on exchequer towards providing relief or extra persondays of work under MGNREGA is that much less

IMD’s normal monsoon forecast lifts business sentiment

H1B visas to most skilled only: Full text of Trump’s ‘Hire American’ order

US President Donald Trump has signed an executive order that calls for a review of the H-1B visa programme, saying they should never be used to replace American workers and be must given to the most skilled and highest paid applicants.

Here is the full text of the executive order signed by President Donald Trump.

By the authority vested in me as President by the Constitution and the laws of the United States of America, and to ensure the faithful execution of the laws, it is hereby ordered as follows:
Section 1. Definitions. As used in this order:

(a) “Buy American Laws” means all statutes, regulations, rules, and Executive Orders relating to Federal procurement or Federal grants including those that refer to “Buy America” or “Buy American” that require, or provide a preference for, the purchase or acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured goods.

(b) “Produced in the United States” means, for iron and steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.

(c) “Petition beneficiaries” means aliens petitioned for by employers to become nonimmigrant visa holders with temporary work authorization under the H-1B visa program.

(d) “Waivers” means exemptions from or waivers of Buy American Laws, or the procedures and conditions used by an executive department or agency (agency) in granting exemptions from or waivers of Buy American Laws.

(e) “Workers in the United States” and “United States workers” shall both be defined as provided at section 212(n)(4)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(n)(4)(E)).

Sec. 2. Policy. It shall be the policy of the executive branch to buy American and hire American.

(a) Buy American Laws. In order to promote economic and national security and to help stimulate economic growth, create good jobs at decent wages, strengthen our middle class, and support the American manufacturing and defense industrial bases, it shall be the policy of the executive branch to maximize, consistent with law, through terms and conditions of Federal financial assistance awards and Federal procurements, the use of goods, products, and materials produced in the United States.

(b) Hire American. In order to create higher wages and employment rates for workers in the United States, and to protect their economic interests, it shall be the policy of the executive branch to rigorously enforce and administer the laws governing entry into the United States of workers from abroad, including section 212(a)(5) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(5)).

Sec. 3. Immediate Enforcement and Assessment of Domestic Preferences According to Buy American Laws. (a) Every agency shall scrupulously monitor, enforce, and comply with Buy American Laws, to the extent they apply, and minimize the use of waivers, consistent with applicable law.

(b) Within 150 days of the date of this order, the heads of all agencies shall:

(i) assess the monitoring of, enforcement of, implementation of, and compliance with Buy American Laws within their agencies;

(ii) assess the use of waivers within their agencies by type and impact on domestic jobs and manufacturing; and

(iii) develop and propose policies for their agencies to ensure that, to the extent permitted by law, Federal financial assistance awards and Federal procurements maximize the use of materials produced in the United States, including manufactured products; components of manufactured products; and materials such as steel, iron, aluminum, and cement.

(c) Within 60 days of the date of this order, the Secretary of Commerce and the Director of the Office of Management and Budget, in consultation with the Secretary of State, the Secretary of Labor, the United States Trade Representative, and the Federal Acquisition Regulatory Council, shall issue guidance to agencies about how to make the assessments and to develop the policies required by subsection (b) of this section.

(d) Within 150 days of the date of this order, the heads of all agencies shall submit findings made pursuant to the assessments required by subsection (b) of this section to the Secretary of Commerce and the Director of the Office of Management and Budget.

(e) Within 150 days of the date of this order, the Secretary of Commerce and the United States Trade Representative shall assess the impacts of all United States free trade agreements and the World Trade Organization Agreement on Government Procurement on the operation of Buy American Laws, including their impacts on the implementation of domestic procurement preferences.

(f) The Secretary of Commerce, in consultation with the Secretary of State, the Director of the Office of Management and Budget, and the United States Trade Representative, shall submit to the President a report on Buy American that includes findings from subsections (b), (d), and (e) of this section. This report shall be submitted within 220 days of the date of this order and shall include specific recommendations to strengthen implementation of Buy American Laws, including domestic procurement preference policies and programs. Subsequent reports on implementation of Buy American Laws shall be submitted by each agency head annually to the Secretary of Commerce and the Director of the Office of Management and Budget, on November 15, 2018, 2019, and 2020, and in subsequent years as directed by the Secretary of Commerce and the Director of the Office of Management and Budget. The Secretary of Commerce shall submit to the President an annual report based on these submissions beginning January 15, 2019.

Sec. 4. Judicious Use of Waivers. (a) To the extent permitted by law, public interest waivers from Buy American Laws should be construed to ensure the maximum utilization of goods, products, and materials produced in the United States.

(b) To the extent permitted by law, determination of public interest waivers shall be made by the head of the agency with the authority over the Federal financial assistance award or Federal procurement under consideration.

(c) To the extent permitted by law, before granting a public interest waiver, the relevant agency shall take appropriate account of whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped steel, iron, or manufactured goods or the use of injuriously subsidized steel, iron, or manufactured goods, and it shall integrate any findings into its waiver determination as appropriate.

Sec. 5. Ensuring the Integrity of the Immigration System in Order to “Hire American.” (a) In order to advance the policy outlined in section 2(b) of this order, the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security shall, as soon as practicable, and consistent with applicable law, propose new rules and issue new guidance, to supersede or revise previous rules and guidance if appropriate, to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse.

(b) In order to promote the proper functioning of the H-1B visa program, the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security shall, as soon as practicable, suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.

Sec. 6. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof;

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals; or

(iii) existing rights or obligations under international agreements.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,
April 18, 2017.

H1B visas to most skilled only: Full text of Trump’s ‘Hire American’ order