US visa fee hike against free trade

The US government’s decision to raise the fees for H1B and L1 visas for skilled professionals seeking temporary work in that country will deal a serious blow to Indian IT companies doing business there. The increase is not small, as the fee has been doubled from $2,000 to $4,000 for H1B visas and from $2,250 to $4,500 for L1 visas. The hike was effected through a provision in a spending bill which was passed by the Congress and signed into law by Barrack Obama. It stipulates that companies which have more than 50 employees and more than 50 per cent employees on H1B or L1 visas will have to pay the increased visa fee on application. Almost all Indian IT companies which send thousands of employees on temporary visas to the US will take a knock as 60 per cent of their revenues come from the US. Nasscom, an association of Indian IT companies, has put the loss of the industry at an annual $400 million.

Indian IT companies have for long invited adverse attention and criticism in the US on the mistaken assumption that they are taking away US jobs. The anti-outsourcing stand gets harder and the rhetoric shriller during election time. The US political leader-ship and the administration have yet to realise that Indian companies have actually created jobs in the US and made investments there. There are facts and figures which prove this. They have paid billions in taxes, and made the American industry more competitive and productive. It is also not realised that most US workers are not willing to do much of the work that Indians do, and many are not qualified for them. The increase in visa fees will result in more work going onshore, and this will ultimately hit the US companies.

The US action is discriminatory and protectionist. It is against all free trade principles which the US always swears by. India has taken up the matter with the US at various levels. The government has also raised it with the US Trade Representative. India can take retaliatory steps, but they can further hurt the trade and other commercial ties between the two countries. It can also raise the issue with the WTO dispute settlement forum, but it will further vitiate the atmosphere and a resolution may take time. The best course is to persuade the US to see reason, and convince it that the measure is counter-productive and will hurt its own interests. American industry will lose its edge if it turns away from skilled migrant labour from other countries.