Washington: Concerned over under-valuation of Rupee that was making Indian exports cheaper, the US Electronic Industries Alliance today (May 12, 2004) proposed tightening L-1 visa rules to prevent foreign companies operating in India to bring their employees to US.

The Indian Rupee, Chinese Yuan, Japanese Yen and Taiwan and Singapore Dollars are "the most undervalued Asian currencies", the industry body said in a report authored by its president Dave McCurdy and chairman of Board of Governors Ronald L Turner.

One reason for US to take a moderate approach to this issue is China and other Asian nations, including India, hold their reserves largely in US Government securities, it said.

"If Asians stopped buying or began unloading these, the Dollar would fall even faster and bond yields would rise, the report noted. "By buying Government securities, Asian central banks are lending the US cheap money, holding down US interest rates and sustaining consumer spending on Asian products, in some cases and mortgage borrowing."

The main concern is not outsourcing, but demagoguery and political overreaction to this business practice, which is not new and will lead to protectionist policies, it said.

Gaining access to highly specialised talent is an important component of US competitiveness. Nearly half of the people hired on H1-B visas have graduate degrees, and only five per cent of US population has same level of education. A large percentage of H1-B visa holders are graduates of US schools.

It suggests that foreign masters and PhD graduates should be exempted from H1-B cap and a fast-track green card given. On the other hand restrictions on L-1 visas should be tightened.