Raghuram Rajan warns US HIRE Act could crush India’s exports
Former Reserve Bank of India chief Raghuram Rajan warned that proposed American legislation targeting outsourced services poses greater risks to Indian exports than recent H-1B visa fee increases. The economist told DeKoder that the HIRE Act, under congressional consideration, could impose lasting damage if tariffs expand beyond physical goods into the services sector, where India holds competitive advantages.
Rajan noted that existing American tariffs already reach 50 percent on some Indian products, surpassing the 47 percent rate applied to Chinese goods. This especially hurts textile manufacturers during peak shopping seasons. He urged Indian negotiators to push for tariff reductions in labor-intensive sectors where the country has built market presence over many years.
The H-1B fee hike carries less severe implications than initially feared, according to Rajan. Indian technology firms increasingly rely on remote work arrangements rather than sending employees to American offices. Companies may shift strategies by recruiting locally educated graduates or establishing more operations through Global Capability Centers in India. Major corporations like Microsoft could expand their Indian workforce instead of sponsoring visa holders, the economist predicted.
