Trump’s H-1B Visa Reforms and Indian Dreams

The Donald Trump administration’s proposal to review the H-1B visa stirred a hornet’s nest in India. Indians, especially IT professionals and engineers, are the main beneficiaries of this work permit issued to skilled foreign workers in the US. While fears are being expressed about what restrictions on the visa would mean for Indians, there are other views which say that this would even present an opportunity to channelise human and material resources in India.


At the end of a close contest peppered with unprecedented controversies throughout the campaign, the Republican Party candidate Donald Trump was elected as the 45th President of the United States (US). As soon as he took office, Trump opened a set of new controversies by issuing several “executive orders” on various vital issues that he had raised during his campaign. It is clear that these orders will have a critical impact on the domestic and foreign policies of the country. Some of the issues that these orders have brought forth for public debates both within and outside the country are: the new immigration policy, reforms in the employment sector, construction of a 1,600-kilometre-long wall along the Mexican border, and trade agreements like North American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP).

Some decisions taken by the Trump administration in its initial days—the reform of rules related to H-1B Visa, the ban on immigration from seven Muslim-majority countries to the US for 90 days, the ban on entry of refugees for 120 days, and freezing of all financial support to sanctuary cities where illegal immigrants are located—are suggestive of the direction in which the new regime in the US is moving—towards protectionism while retreating from prior global commitments. It is undisputable that these policy shifts will have a serious impact on countries all over the world.

Trump’s Reforms in the Job Market and the Case of H-1B Visa

Outsourcing of jobs and the H-1B visa are two major issues that have dominated debates (Manning 2016; Hope 2016) in the US for the last few years. Both these issues got a lot of importance in the presidential elections as well. A powerful lobby of neo-conservatives in the US argues that both these policies result in the loss of employment opportunities for Americans (Amadeo 2017). Even the catchy slogan “America First” used by Trump is the outcome of this debate. H-1B visa is a work permit issued to skilled foreign workers in the US. This is issued with a presumption that American workers with required skills and expertise are not available. An H-1B visa holder can work in the country for a maximum period of six years and the minimum salary of such a worker is fixed at $ 60,000 per annum. The number of H-1B visas to be issued in a year is also limited to 65,000 (an additional 20,000 H-1B visas are issued to foreign students who get their postgraduate degree in the US). The L-1 visa is another type of visa which is issued to foreign workers for a very short period. L-1A visa is for maximum five years and L-1B visa is for seven years. In this case, the workers can work only for their company and the minimum salary provisions are not applicable.

There is a huge demand for these visas, especially from South Asian countries. Estimates show that there were 2,36,000 applicants for the H-1B visa in 2016, which is four times higher than the designated number of visas issued in a year. As the average salary of an American worker is much higher than that of an H-1B visa holder, companies bring in foreigners to work under this visa. This is the prevalent trend in the IT sector in the US where Indian companies are the major service providers. Trump and his supporters argue that these companies discriminate against Americans during recruitments and eligible Americans are denied jobs (Torres 2017). Such jobs are then taken over by foreigners. This goes against the objectives and the spirit of the H-1B visa provisions. When Hillary Clinton supported the H-1B visa during her campaign, Trump declared that he hates the visa and would stop it, if he won the elections. The election results also showed that Trump was able to capitalise on the sentiments of American youth on this issue.

This is the context in which Zoe Lofgren, member of the House of Representatives from the Silicon Valley, proposed a new bill named “High-Skilled Integrity and Fairness Act of 2017” in the American Congress. Section 7 of this act is titled “Visas Reserved for Small and Start-up Employers” and clearly mentions that the act sets aside 20% of the annual allocation of H-1B visas for small and start-up employers (those with 50 or fewer employees). This is to create more employment opportunities through H-1B visas. Senator Sherrod Brown had also proposed a bill called the “H-1B and L-1 Reform Act of 2017” in this regard. These bills have proposed nine major clauses which are now under consideration by the US Administration. The most important clause is that of the revision of the provisions pertaining to the minimum salary of an H-1B visa holder. The bill proposes to increase the per annum salary from $60,000 to $1,30,000. Additionally, the bill proposes to reserve 20% of the visas for small start-up firms where the number of employees is below 50. Similarly, the bill proposes that the partners of H-1B visa holders are to be banned from working in the US. Basically, all these proposals are aimed at discouraging companies from employing foreigners as cheap labour. Similar proposals have been made for the L-1 Visa as well. Daren Essa has proposed another bill aiming to place major restrictions on American companies which outsource their jobs to foreign companies. It is clear that all these bills, if implemented, will bring about fundamental changes in the labour market of the United States.

Dark American Dreams Ahead? 

Indians are the major beneficiaries of both H-1B and L-1 visas. A report published by New York Times indicates that more than 70% of the H-1B visa holders are Indians (Goel 2017). Indians form the majority among the H-1B visa holders in two major sectors—86% among IT professionals and 40% among engineers. According to Aravind Subramanian, the Chief Economic Advisor to the Government of India, the new restrictions on H-1B visa will be a major hurdle for the Indian IT-based businesses and industries which aim for a 10% growth in the current year. The point is that both these sectors account for the highest number of H-1B visa workers and Indian companies benefit from it. The major global IT service providers from India like Tata Consultancy Services (TCS), Infosys, and Wipro utilise huge shares of such visas to send a large number of IT professionals every year to the US for companies like Google, Apple, and Microsoft who are their major clients. Many people allege that these companies at times use this opportunity to deny jobs to Americans and instead employ foreigners through H-1B visa because the wages are significantly lesser for foreigners as compared to the average American worker. 
It is estimated that the $150 billion Indian IT industry is highly reliant on the American market as 60% of the income in this industry is mobilised from companies in the US (Nirmal 2016). The Indian IT Industry is already facing many challenges: Brexit, technological advances like automation and Artificial Intelligence, and the ongoing debates on restrictions in outsourcing. 

On the other hand, IT companies argue that there is a real shortage of expertise in the US due to unavailability of technically-skilled native workers who can meet the requirements of the industry. This forces the companies to increasingly depend on IT professionals from South Asian countries, especially India, because these professionals are highly skilled and easily available. They also highlight that the skill and expertise of Indian IT professionals is a major factor in the rapid growth of many American companies like IBM, Microsoft and Apple. A recent study by the Confederation of Indian Industry (CII) reveals that 100 Indian companies, mostly IT companies, have made a fresh investment of $15.3 billion in the US in 2015 (Confederation of Indian Industry and Thornton 2015). This has created 91,000 new jobs which means that Indians not only take up employment opportunities in the US, they also create a large number of employment opportunities in that country. Therefore, any restriction on the H-1B visa, which ultimately leads to American companies being denied the skills and expertise of Indian professionals, would have a negative impact on the growth of the US economy in general and the IT sector of that country in particular. Many believe that in such a situation, the companies may even be forced to shift their activities outside the US. 

It is obvious that the restrictions on H-1B and L-1 visas would certainly create a crisis in the Indian IT industry. However, many believe that this would open new opportunities as well. N R Narayana Murthy, the founder of Infosys, presents an optimistic view in this regard. Murthy suggests that this crisis may lead to new innovations in the field and that would ultimately provide new avenues. In his opinion, the possible H-1B visa restrictions may not have much impact on the Indian IT industry as the major players in this field are already capable of providing their services to anyone, anywhere, and anytime.ii  Many are of the view that this is an opportunity to channelise resources, both human and material, to the economic and industrial development of India. This may possibly boost the “Make in India” programme through more investment and therefore, on a long-term basis, this would be good for the interest of the country. 

Another concern highlighted by many is that the new immigration policies will have a major impact on Indians.  According to reports, 3,00,000 Indian Americans may need to leave the US as they do not have proper documents.iii  The US Department of Homeland Security has already issued two memos which enforce deportation of illegal immigrants. The move to withdraw from regional organisations like NAFTA by the US would also definitely have an impact on ongoing neo-liberal projects where the US is the major proponent as well as the beneficiary. The US’s move to resist China in international affairs would also have a critical role in shaping the trajectories of world politics in the days to come. Though, it is too early to make any final comment on any of these developments, the direction in which Trump is leading the US is more or less clear from his new policy initiatives. The ongoing developments show that every country in the world, including India, has something to worry about given the way Trump has started his career as the President of the US. 

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