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Commentary

Visiting the UK? Pay a 3000 Pound Bond. Will India Retaliate?

The UK has decided to charge a “bond” of 3000 pounds (about 2.8 lakh rupees) every visitor from India, Pakistan, Nigeria, Sri Lanka, Bangladesh and Ghana who come on a 6 month visitor visa, starting November 2013. From FT:

Visitors from six Asian and African countries including India, Pakistan and Nigeria are to be charged a £3,000 “bond” on arrival in the UK under a trial scheme to prevent visa overstayers, the Home Office has confirmed.

The pilot, due to begin this November, will only apply to those foreigners coming to Britain on six-month visitor visas – but ministers are said to be interested in extending the programme to all visa types and all countries over time. The bond will be repaid entirely to those who leave the country before their visa has expired.

I’m not sure what the system is now, but I’ve gone to the UK on a short (1 week) visit and was given a 1 year visa at the time. I assume they provide 6 month visas as a standard nowadays, even for short term business visitors.

Will this slow down illegal immigration? No. The illegal immigrants HAVE the money, or can raise it – it just puts a number they have to raise. Then the authorities, knowing they have 3,000 pounds as security, may not attempt to chase them down, thinking they’ll want it back. And at some point they’ll figure out how to stay inside legally or something. This is a good barrier for them – pay this much and if you’re willing to lose it, you might be able to immigrate anyhow.

For the casual visitor it is a disaster. A family of four visiting London would have to shell out Rs. 12 lakhs as a deposit. Be there for two weeks, and you’ll probably get your money back in a month or two. The interest cost on that might end up being Rs. 20,000 – another cost for your journey, apart from the pain of actually arranging for that amount etc.

Like most silly barriers, this one is too low to prevent what it intends to (immigration) and too high for regular users (visitors).

How should the Indian government react?

If India believes we are being unfairly targeted (and it seems like we are) then we should have retrospective amount bonds of Rs. 300,000 for each UK visitor. The MEA has gotten more and more efficient in the last few years, and it could easily figure out how to charge credit cards and refund that amount back. The action will bring us fairly large amounts of foreign exchange.

Country Wise Visitors to India

Source: Ministry of Tourism

With the UK responsible for 800,000 visitors to India (65,000 per month), the amount that can be collected is 1,950 crores, which might increase in some times and come down at  others. At a 9% interest rate, we could earn Rs. 180 crores from this exercise! (for a comparison: the center has given Rs. 145 cr. for the rescue efforts in Uttarkhand)

But that is CAG kind of thinking. What will REALLY happen is that UK visitors will not come to India. So the 800,000 will come down to probably 100,000. But it might be a good reason for the UK to remove its anti-India clauses immediately, though it will hurt India in the short term (lower tourism inflows with the rupee already sliding).

Think of it as a duty. They are charging Indians an “anti-dumping” duty, which is how they would charge goods that were imported from a country at an extremely cheap price. The retaliation, if unfair, is for the other country to introduce a counter-duty. It hurts both parties, but if you don’t do it, you’ll be a sissy. India, sadly, has been a sissy too long.

I will, simply put, not “visit” the UK unless someone else is footing this stupid bill. I’m sure a number of others, who have a choice, will not. And the extremely desperate will raise the cash and assume it’s excuse enough to immigrate. But I think a lot of western countries will introduce these kinds of measures, largely to protect local jobs.

IT Impact: this could cost more for IT companies who send people for short term assignments but they are already bloated with so much cash that giving it to the UK might not impact them much.  TCS, HCL Tech, Infy and Satyam/TechM are impacted.

Tourist operator impact: Expect tourist operators (“Visit Europe in 15 days”) to either demand 10 day visas, or cut out London from their itinerary from November.

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