India-US : H-1B Visa Issues

Why in News ?

On December 31, 2020, outgoing US President Donald Trump extended a freeze on the most sought  after H-1B Visas along with other types of foreign work visas by three months to March 31, affecting a large number of Indian IT professionals who were issued visas by the US government for the fiscal year 2021.

A Top India-centric American business advocacy group has urged the newly elected US President Joe Biden (a Democrat) administration to ease the restrictions on H-1B.

What is H-1B Visas ?

H-1B  is a non-immigrant visa that allows the US companies to employ foreign workers in "specialty occupations" that require theoretical or technical expertise. 

This Visa in the United States under Immigration and Nationality Act, which allows US employers to temporarily employ foreign workers in specialty occupations.

The duration of a stay is three years and can be extended up to Six years. Once this period is over, the visa holder will be need to re-apply.

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Background :

• Since, Economic  Liberalisation 1991, India shift higher growth trajectory and to integrate with the world market. 

• Service Sector (Tertiary Sector) overcome the Primary and secondary Sector of the economy.

• India's share in world services exports was 3.4% in 2018 compared to 1.7% for goods exports, reflecting its relative competitiveness in services.

• India acquired more than 50% service exports particularly in Information Technology (IT), Business Process Outsourcing (BPO) and Professional services.

• According to World Trade Organisation (WTO), India's 21% services exports through Mode-4(movement of natural persons).

• Mode-4 services include Computer Software (27%) followed by engineering, related technical services and R&D (17%).

Issues :

The India-US dispute over H-1B visas can be traded to the significant relationship between the two countries post 2000 in services trade, especially in software services and predominance of Indian IT professionals in H-1B visas issued by the United States of America (USA). Due to changes in immigration and labour market regulations on visa caps and fees, necessity tests, recognition of qualifications, and other discretionary policies, India faces growing Mode-4 related challenges which affect cross border mobility of its service providers.

In the US market, India's services exports have been facing growing protectionism with respect to the movement of its specialty occupations (H-1B Visas holders) and intra-corporate transferees (L-1 Visa holders).

The Trump administration on June 23, 2020 suspended the H-1B Visas, along with other types of foreign work visas, until the end of 2020 to protect American worker. This impacted Indian professional workers and industry.

In March 2016, India filed a complaint with WTO challenging the US over steep visa fee increases for H-1B and L-1 visas, citing discriminatory treatment of Indian IT companies and workers and inconsistency with the US' WTO commitments in Mode-4.

The US General Accounting Office has noted that controls on the H-1B program lack effectiveness as loopholes and lax enforcement have led to exploitation of both visa holders and American workers.

Reforms in H-1B Visas :

There have been several changes in H-1B related Legislation over the years with regard to visa caps, application fees, eligibility conditions and processes. Some important changes over the years include -

• An increase in H-1B quota from 65,000 to 115,000 in 1999 and 2000 and further to 195,000 during 2001-03 during the Clinton administration and its subsequent reduction to 65,000 in 2004.

• Introduction and subsequent hike in the retraining fee aimed are skilling US workers and reducing dependence on H-1Bs over time.

• Creation of a new sub-categories of H-1B Visas under the Chile-US and Singapore-US Free Trade Agreement in 2003.

• Introduction of an anti-fraud fee under the H-1B Visa Reform Act of 2004.

• Requirement under the Employ American Workers Act of 2009 for employers to attest that additional H-1B workers would not displace any US worker in an equivalent position during a specified time period.

• A Labour Condition Application to ensure that the wage offered to the non-immigrant workers meets or exceeds the prevailing wage in the area of employment.

• Almost doubling of the visa fees in 2010 and 2015 for the firms with more than 50 employees comprising of non-immigrant workers.

The dispute remains in consultations. While the matter has been discussed by US and Indian officials at various levels and in various forums, the case has not proceeded to the formal dispute settlement phase in the WTO. The US claims that disputed laws are fully consistent with its WTO obligations. However, it has indicated that it would review the fee increase, though there is no proposal to modify the concerned policies.

Way Ahead :

India will have to continue emphasising the importance of transparent, non-discretionary, and predictable policies for non-immigrant visas in the US, through industry associations and government-to-government dialogues. The issues must also be brought up in discussions for a Limited Trade Deal, even though it is unlikely to be resolved under such an agreement. Simultaneously, discussions for a totalisation agreement must also be pursued given the large double taxation burden currently incurred by Indian and US professionals working in each other's countries.

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References

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