When Brits voted in favour of Brexit, the world was shocked. It was clearly a nation breaking, minority stance nobody gave enough attention to even enquire about it. But then, something changed. Apparently, it was not a minority but the majority, tired of the status quo wanting to bring in a change. This minority turned majority voted to move out of the European Union. As simple as that. Then again, when Presidential candidate Donald Trump rose to power, it was pronounced as the victory of the homeless. It was touted as an attempt to fight against the illegal immigrants, bring back jobs and to make America great again.
One of the promises of this presidential candidate in the polls was to tighten the rules for grant of H1B visa, stop its abuse and to make sure that visas are given to the most skilled or highest paid petitioners. Very recently, president trump has given an executive order to the federal department to review the visa regime. The H1B visa is a non-immigrant visa that allows US companies to employ foreign workers in specialty occupations, mostly those that require technical expertise in specialised fields. It is being publicized that the review will lead to the H1B visa being awarded to the highest paying, skilled jobs. Currently, US issue 65000 H1B visas and another 20000 to those applicants having graduate / post graduate degrees from US educational institutions based on a lottery system. This is poised for a change.
Under the proposed regime, H1B visas will be awarded on the basis of merit. These merit-based visas will then lead to merit-based green cards, hence eventually moving towards less randomness, less probability and more statistics. Sounds all good right? However, there are blink-and-you-miss catches there. Currently, the number of green cards that can be given to people of any country is capped at a fixed percentage, irrespective of the size of the country. Given India’s population and the current backlog of people waiting in line for green card, the number is set to rise exponentially. As an H1B visa holder says, in the present scenario, this makes them no less than an indentured servant. The policy loophole is being abused by the job providers as well. Since H1B visa is tied to a specific employer and there is huge amount of paperwork involved to switch employers, these job providers seek out Indian immigrants because they are aware of our helplessness. These fellow Indians will end up waiting for their green cards and will always be afraid to leave their current employers.
Right now, Indian technology companies appear to be the biggest losers. Every year, thousands of employees are being hired by these companies for their US operations. Their size can be estimated by the sheer fact that US accounts for 60% of the revenue of Indian IT companies. Naturally, these companies applied in bulk for the lottery visa. To accuse these companies for abuse of the system would be a blatant distortion of fact. They are just doing their bit to enhance their win probability. However, with this setback, there is bound to increase in cost and disruptions in the business for these companies.
Notably, Indian IT companies have been agile enough to respond to the proposed changes by declaring their intentions to cut back their reliance on the visa programme, rather focus on the domestic talent and resources. Tech giants including TCS, Infosys are talking about tweaking their business models. The number of applications for H1B visa have already dropped significantly this year, compared to the last year.
It is not as easy as it sounds. Changing this regime will require Congressional support. Plus, US have a lot to lose at its end also. A move to award visas based on salary will hurt start-ups who can’t afford skyrocketing salaries, thus hurting job creation in a country hell bent on getting jobs back to its citizens, whether they want them or not. Not to forgot that the much accused Indian IT professional form the biggest pool of qualified professionals, contribution of whose services go a long way in making America globally competitive. Also, contrary to popular belief, awarding H1B visas to Indian professionals is not to reduce costs, but for the skills they bring to table. Many US businesses exploit the H1B visas to easily gain access to skills of these foreign professionals, graduates from US universities to fill up for the gaps left by US nationals. Also, given that the fees of filing a successful petition for a visa by the employer are high enough to compensate for the low remuneration offered to these professionals; it is skill rather than costs which are economically guiding the decisions of US employers. It is being said that in areas of high skill requirement, where there is a shortage of Americans, hiring foreign workers actually add to the efficiency. It is not a replacement of American workers for lower costs.
However, how much of backbone does India really have to fight this trade war with this mighty country? Apart from Visa issues, the mighty Harley Davidson and its import always find its mention whenever we talk about trade between India and US. Our faithful commerce and industry minister and finance minister make meek attempt at threatening their trade partners in order to bring them to agreeable terms. Sitharaman recently pointed out the big US companies that are earning big margins in India, about all their profits and revenues accruing to them, royalties flowing to them. But can we really fight this battle? Given that US accounts for majority of revenue, not just for the IT companies but for major Indian pharmaceuticals as well, can we afford to risk all this business? India exports USD 40 billion worth of goods and services to the United States but imports only USD 20 billion worth. US accounts for 15 percent of India’s exports while India accounts for only 1.7 percent of US exports. India clearly has more to lose. But this does not mean we should not retaliate. The idea is to be strategic about your hits.
Already the protectionist, inward looking attitude has been spreading across the globe. Prompted by the US, countries including Singapore and Australia have also proposed changes to their visa regimes, making it more difficult for Indian nationals to work abroad. More and more Indians abroad are looking at avenues to come back to their country.
The finance and commerce ministers of both countries have met multiple times ever since and are maintaining diplomatic stance. Each stressing on the bipartisan support and the importance of trade, they are focussing on developing strong economic and strategic ties. Possibly, peace and cooperation is the best way to go about right now.