Miffed India writes to US

Calls proposed amendment discriminatory against Indian IT companies

In a fresh row over the US' H-1B and L-1 visas for Indian professionals, the government has slammed that country, terming its newly-proposed immigration reform plan "discriminatory" against Indian information technology (IT) firms.

In a strongly-worded letter to new US Trade Representative Michael Froman, Commerce Secretary S R Rao has voiced the concerns of India, which feels the proposed law is protectionist in nature and against healthy competition. The letter also alleges the new Bill, called the H-1B and L-1 Visa Reform Act of 2013 and put forward by a bipartisan group of Senators to overhaul the US immigration system, is "entirely targeted against Indian IT firms" and this "does not serve any purpose for the US".

The commerce and industry ministry is awaiting a reply to the letter. The government does not rule out the option of taking the issue to the dispute resolution body of the World Trade Organization. It wants to analyse and study the Bill properly before that, officials told Business Standard.

US President Barack Obama has said he is "committed to comprehensively fixing the broken immigration system through common-sense reforms, so that everyone plays by the same rules."

This is not the first time India and the US have locked horns over professional visas. In 2010, the US had raised the fees for H-1B and L-1 visa for applicants of firms where more than 50 per cent of applicants were non-immigrants. India had challenged the move in the WTO but the matter was settled later with Indian companies agreeing that this was meant for all and not only India.

The proposed comprehensive immigration Bill (if passed by the Congress and signed into law by the US President) will seek to restrict companies from hiring skilled and talented workers on a H-1B visa if 50 per cent of their employees are not Americans.

The Bill stipulates a firm will have to pay a $5,000 fee per additional worker if it has 50 or more employees and more than 30 per cent but less than 50 per cent of them are H-1B or L-1 employees. If it has 50 or more employees and more than 50 per cent of them are H-1B or L-1 ones, it will have to pay a $10,000 fee per additional worker.

The debate has turned murky with a new proposal made by a Republican senator, Chuck Grassley, not part of original proposers. He has suggested some stringent actions on firms hiring foreign workers in large numbers instead of going for local recruitment.

The Bill also says firms with more than 15 per cent H-1B workers would be prohibited from placing an H-1B visa holder at a client site.

"This Bill is clearly aimed at Indian outsourcing firms. We are yet to analyse whether it is WTO-compliant or not. But it clearly concerns trade and this is nothing but a non-tariff trade barrier. This is going to adversely impact the margins of all Indian IT firms present in the US. Surprisingly, the same model is followed by US companies present here," said Nasscom President Som Mittal.

Adding fuel to the fire, during a Congressional hearing on immigration reform last month, Richard Durbin, part of the original proposers, had mentioned the names of Infosys, Wipro and Tata Consultancy Services and accused these firms of "abusing" H-1B visas.

"Such restrictions, including new ones, on non-immigrant visas, if adopted, should apply uniformly to all applicants," said CII Director-General Chandrajit Banerjee.

The matter was also raised by Finance Minister P Chidambaram during his recent visit to Washington. He specifically said temporary work visas should not be confused with immigration.

THE SOUR POINT
Key provisions of the US' proposed immigration law

* Restrict a firm from hiring workers on H-1B visa if 50% of its employees are not Americans
* If a firm has 50 or more employees, and more than 30% but less than 50% of them are H-1B or L-1 employees, it will need to pay a $5,000 fee per additional worker
* If a firm has 50 or more employees and more than 50% of them are H-1B or L-1 employees, it will have to pay a $10,000 fee per additional worker