Protests against new visa norms for the USA

Things are about to get expensive for Indian outsourcing firms doing business in the United States. The Indian information technology industry has called the recent hike in H1-B and L1 visa fees by the US highly discriminatory, and said that if the US continues with its discriminatory policies against Indian IT firms, they will move on to new markets.
As president Barack Obama signed the border security bill into a law, Nasscom, the apex body representing the Indian software industry, proposed to create alternative business models in which new jobs can be created in India. The leading Indian IT firms also emphasised they were trying to come out with new models on how to contain the impact of fee increase.

In a strong letter to Trade Representative Ron Kirk, Commerce and Industry Minister Anand Sharma said it was estimated that the Bill would have an additional cost implication of over $ 200 million annually and would adversely impact the competitiveness and commercial interests of Indian companies sending professionals to the US to undertake projects for American customers.

“Though the need of the US government to strengthen its border security is understandable,” it was inexplicable why Indian companies should bear the cost of the highly discriminatory law. He pointed out that the Indian software industry was already deeply burdened in the absence of a tantalization agreement, requiring it to pay more than $ 1billion every year to the US government in the form of social security, with no benefit or prospect of refund.

The US Senate on August 5 had approved a substantial increase in application fees for H1 B and L visas, the most sought after Indian IT professionals. The hike is proposed to fund a $ 600 million emergency package to improve security along the porous Mexican border.

The Senate measure increases the visa fee to $ 2,000 per application on those companies that have less than 50 per cent of their employees as American citizens. In his letter, Sharma conveyed the concerns of the Indian software industry that the increase in US visa fee would adversely impact companies of Indian origin, which account for about 12 per cent of the total number of visas issued by the US.

While the US companies use H-1B and L visas in larger numbers, they will not be liable for the increased fees but Indian companies will be affected as they are likely to have more than 50 per cent of the their employees on these visas. Sharma further said that the Indian software industry is already deeply burdened in the absence of a Tantalisation Agreement, requiring them to pay more than $ 1 billion every year to the US government in the form of social security, with no benefit or prospect of refund.
The proposed massive increase in visa application fee would primarily affect the top Indian IT companies, who rely majorly on these categories of visas to continue with their work in the US.

The US Stand
The US Border Security Bill aims to raise $ 600 million to boost surveillance along the US-Mexico border by hiking H-1B and L-1 visa application fees. The applicable companies are those with 50 or more employees in the US and with over 50 per cent of this workforce who are non-immigrants (temporary skilled workers for H-1B visas and those for L-1 status). The bill, shepherded through the Senate by Chuck Schumer (Downstate New York), jacks up application fees for H-1B visa from $ 320 to $2,320 and the L visas, which are issued to non-citizen workers transferring from a foreign country to the United States, from $ 320 to $2,570.

IT industry voices concern
According to industry estimates, the hike in the visa fees to fund new measures would result in Indian IT firms having to shell out up to $ 250 million annually on visa costs, as on average, 70-80 per cent of the onsite workforce of Indian companies in the US is on temporary work visas. According to Nasscom's estimates, Indian companies apply for 50,000 visas every year, including H1B and L1 visas, besides renewal of old visas.

Nasscom, which has protested against the 'discrimination' through the Indian government and various industry associations in the US, said if working in the US was becoming difficult, then the Indian IT industry would have to create new business models and bring the jobs back to India.

Som Mittal, president, Nasscom lashed out at the move by the US to increase the visa fees for software professionals, calling it ‘discriminatory’ and said that unemployment and the upcoming Senate elections in the US may have played a role in recent statements made by US authorities. 

The worst hit Indian origin companies include those from the information technology sector such as Infosys, Tata and Wipro. India is considering various options to soften the blow for Indian companies and skilled workers going there. These include raising the issue at various bilateral and international forums such as the World Trade Organisation.

Though the question of granting visas is not part of WTO, the Indian government feels that a country like the US cannot discriminate between two sets of companies located in its territory.

The government is also looking to see if the US legislation is a violation of the WTO's most-favoured nation treatment principle. Article VI of the WTO's General Agreement on Trade in Services specifies that domestic regulations of all countries should be administered in a reasonable, objective and impartial manner.