India’s commerce ministry has stepped in to take action against what has been termed as an “unfair” hike in US work visa fees.
The US government has signed off on a new $1.8-trillion spending package, which among other things introduces a hefty $4,000 fee for certain categories of the H-1B visa and $4,500 for the L1 visa. These visas are popular among Indian software firms operating in the US and industry body NASSCOM has estimated that the new hike would hit the IT sector with losses of around $400 million annually.
Commerce minister Nirmala Sitharaman has written to her US counterpart, commerce secretary Penny Pritzker, and also held a meeting with NASSCOM and the Federation of Indian Chambers of Commerce and Industry (FICCI) representatives to try and find a way forward.
Under the new rule effective from April 1 this year, companies with more than 50 employees and more than 50 per cent of their US employees on H-1B and L1 visas would have to pay the new fee.
FICCI said in a statement: “The Indian IT industry is of the opinion that the additional fee is unjustified… such legislations not only impact business of the Indian IT sector but also limit access to skilled IT personnel for US companies.
“Moreover, increasing costs of hiring IT skilled personnel and services will influence US technology companies to consider moving IT operations overseas, thereby reducing US jobs and tax revenues. In the longer run, it will also imbalance America’s IT services and products consumer market.”
Indian technology industry paid $22.5 billion in taxes during the financial years 2011-15, besides investing $2 billion in FY 2011-13 in the US as well as supported 411,000 jobs in FY2015 directly or indirectly, according to a Nasscom report.
The US is among the biggest markets for India’s tech giants, who earn about 60 per cent of their revenues from the North American region and have regularly raised concerns over the country’s unfriendly visa norms.
“India and the US have built a strategic partnership across sectors and recognise that free movement of global talent is a critical factor for their partnership. Discriminatory or protectionist measures would adversely impact the India-US bilateral trade,” Nasscom said in a recent statement.
According to figures, around 70 per cent of the H-1B visas in 2014 went to workers from India and therefore it is no surprise that the Indian IT industry sees the new rules as a brazen attempt at protectionism.
The ‘Consolidated Appropriations Act 2016’ was signed into law by US President Barack Obama last month. This year’s Congressional approved quota of 65,000 H-1B visas was filled up in the first few days of the start of the application process on April 1. In fact the US government had to resort to a computerized draw of lots as it received several times the quota of 65,000.
The US government’s moves on this crucial work visa clearly seem to be divorced from the realities on the ground. The Indian government will have to get tough to ensure Indian IT firms are not hit hard in the long run.