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Good morning. In today’s edition — H-1B visas are a tool of economic growth for the US as well and not just India; Reserve Bank of India (RBI) shares data of willful defaulters in private sector loans; and the Securities and Exchange Board of India (SEBI) unearths new front-running scam within PNB Metlife.

CORE CONVERSATIONS

Stricter H-1B Rules Threaten Indian IT's Role In US Growth: Nasscom Chief

India’s global contribution to science, technology, engineering, and math (STEM) amounts to $254 billion annually, with 60% of this revenue generated from the US market. A significant portion of India’s workforce plays a critical role in the international tech ecosystem, particularly in the US, facilitated largely by H-1B visa immigration.

India’s capacity to produce a staggering number of engineering graduates—nearly seven times that of the US—positions it as an indispensable partner in meeting global STEM demands. This is especially true for cutting-edge fields like artificial intelligence (AI), data science, and cloud engineering, where skilled talent shortages remain acute.

However, the transition to a new US administration has heightened concerns about potential changes to H-1B visa regulations. These changes could create ripple effects for aspiring and existing Indian immigrants. The bigger questions are whether stricter visa rules would pose challenges for IT and tech companies reliant on H-1B visas and how potential tariffs or cuts targeting India’s IT sector could reshape India-US trade dynamics.

Rajesh Nambiar, president of the National Association of Software and Service Companies (NASSCOM) told The Core Report that in recent times, the US has faced significant shortages in STEM and digital talent. So the demand for these skills is expected to continue to outpace non-stem roles through 2030.

In an interview, Nambiar highlighted significant shifts in the use of H-1B and L-1B visas between India and US-based tech companies. Over the past eight years, Indian firms, including TCS, Wipro, Infosys, and HCL, have reduced their reliance on these visas by 60%. This decline is taking shape since IT firms have been diversifying talent sourcing and reducing dependency on U.S. visa programs, according to Nambiar.  

In contrast, US-based tech giants like Amazon, Google, Meta, Microsoft, and Apple have in fact seen an 189% surge in their use of the same visa categories during the same period, leveraging them to bring in skilled talent from India.

“Historically, we have managed to navigate shifts in leadership successfully. However, when we get into the specifics, programs like H-1B visas, which form the backbone of skilled talent mobility, remain critical given the persistent demand for STEM talent in the US,” he added. 

PODCAST

The Stock Markets Take A Pounding On Foreign Investor Selling

On Episode 465 of The Core Report, financial journalist Govindraj Ethiraj talks to Dinesh Kanabar, CEO at tax advisory company Dhruva Advisors as well as Sheetal Sapale, Vice President at Pharmarack.

• The stock markets take a pounding on foreign investor selling, the last week has no real good news.

• India’s direct tax collections are rising, what is driving it?

• Indians are willing to seek treatment for more disease conditions including depression and that is driving up sales of cures

• Rupee hits fresh low, forex reserves drop sharply

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CORE NUMBER

Rs 1,96,441 crore

This is the total value of loans willfully defaulted by private sector companies in India. According to an RTI reply from the RBI obtained by The Indian Express, 2,664 companies have been identified as willful defaulters, failing to repay loans despite having the capacity to do so. Gitanjali Gems Ltd tops the list with an outstanding debt of Rs 8,516 crore, followed by ABG Shipyard with Rs 4,684 crore. This situation raises serious concerns about the efficacy of lending and monitoring processes within the Indian banking system. However, there have been ongoing by agencies like the Serious Fraud Investigation Office and the Enforcement Directorate against these companies, particularly in cases involving fund diversion or fraudulent practices.

FROM THE PERIPHERY

—🚘 India's passenger vehicle (PV) and two-wheeler (2W) exports grew significantly in CY2024 compared to CY2023. PV exports rose by 7.79% to 664,648 units, while 2W shipments surged by nearly 22% to 3,602,151 units in the first 11 months of CY2024, data from the Society of Indian Automobile Manufacturers (SIAM) showed. This contrasts with the previous year, where PV shipments grew by only 5% and 2W exports declined by 20%. While India aims to export 50% of its automobile production, currently, only 14.6% of PVs and 16.34% of two-wheelers manufactured in the country are exported.  

—💲 Foreign portfolio investors (FPIs) turned net sellers in Indian equities last week, withdrawing Rs 976 crore amid a strengthening US dollar and rising US 10-year bond yields. This shift in sentiment occurred despite a positive start to the week, with FPIs initially investing Rs 3,126 crore. However, they offloaded over Rs 4,102 crore in the latter half of the week, resulting in the overall net outflow. Despite this reversal, the broader trend for December remains positive, with FPIs having infused Rs 21,789 crore into Indian equities so far this month. 

—📉 The combined market valuation of India's top 10 most valued companies plummeted by Rs 4,95,061 crore last week, reflecting bearish sentiments in the equity markets.  IT services giant Tata Consultancy Services (TCS) and retail major Reliance Industries led the decline among blue-chip stocks. This downturn coincided with a weak broader market performance, with the BSE benchmark index falling by 4.98% and the Nifty recording a sharp 4.77% decline, its steepest weekly fall since June 2022, according to Mint.

—🧑‍⚖️ Markets regulator Securities and Exchange Board of India (SEBI) has uncovered a front-running scheme involving PNB MetLife India Insurance Company's equity dealer, Sachin Dagli, and eight others, leading to unlawful gains of Rs 21.16 crore. After concluding an investigation, SEBI revealed  6,766 instances of fraudulent trades executed by entities such as Dhanmata Realty Pvt. Ltd. and Worthy Distributors Pvt. Ltd. These are entities linked to the scam facilitated by the equity dealer Dagli at the life insurance company. According to SEBI, these entities were used as conduits to execute fraudulent trades based on non-public information about impending large orders placed by PNB MetLife and institutional clients of Investec, another firm involved..

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