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India's Minister of State for Commerce and Industry, Nirmala Sitharaman, has described recent US H-1B and L-1 visa (both for L-1A visas and L-1B visas) fee increases which affect mainly Indian owned companies as a 'non-tariff barrier' on India. Non-tariff barriers refer to restrictions that result from conditions, prohibitions or specific market requirements that make importation or exportation of products difficult and costly.
In India's case, the non-tariff barrier refers to personnel not products, with H-1B and L-1 visa fee increases making it far more costly to transfer employees of Indian tech companies to US offices. The visa fee increases were signed into law by US President, Barack Obama, on December 18, 2015 as part of the Consolidated Appropriations Act, 2016.
The Act included legislation to increase H-1B and L-1 visa fees, which as a result of the Act were doubled, compared to the previous fees that applied to companies with fifty or more staff with more than fifty percent being on H-1B and L-1 visas. This affected mainly Indian owned companies. The H-1B visa fee increased from $2,000 to $4,000, while the L-1 visa went up from $2,250 to $4,500.
Sitharaman said: "By increasing H-1B and L-1 visa fees to a 'ridiculously high' rate, the US is effectively imposing a non-tariff barrier on India. While we are not against paying visa fees, the cost cannot be so high that it deters people from obtaining the visa."
Contact with US trade representative about L-1 visa and H-1B visa fee hike
While addressing an audience at the 'Invest Karnataka' event in Bengaluru on February 4, Sitharaman said: "I myself have taken this up with the US trade representative Mr Michael Forman. We have spoken to various Congressmen. We have said that this is a non-tariff barrier you are imposing on us."
Since 2010, many Indian IT companies have had to pay additional fees for an L-1A or L-1B intra-company transfer visa or an H-1B visa petition, contributing millions of dollars towards the cost of policing the US-Mexican border to prevent illegal immigration.
Companies employing 50 or more employees in the United States, with 50 per cent of their workforce in the country on an H-1B or L-1 visa, are subject to the additional fees.
The fee increases were controversial to say the least, given that in October 2015 – as reported by workpermit.com – US immigration had scrapped the then additional fees of $2,250 for an L-1 visa and the $2,000 fee for an H-1B visa. However, Congressional sources at the time said that 'Congress could, at any point, come up with new legislation to reinstate the discriminatory H-1B and L-1 visa fees.' What has happened now is that after this fee was scrapped for a short time it is reintroduced and doubled in size.
Cost to Indian IT companies of visa fee increases
It has been predicted that the visa fee increases will cost Indian IT companies an additional $400 million per year, which could seriously affect bottom-lines. However, reports coming out of India said the fees would have 'little effect' on profits because firms would recoup the money by increasing their service fees to clients and cut costs by processing more work from their centres in India.
Industry estimates suggest that India's largest IT tech companies including - TCS, Cognizant, Infosys and Wipro – account for 15,000 – 20,000 visas each year. Figures for the 2014 financial year show that overall 67.4 per cent of the 161,369 H-1B visas issued went to Indians. Indians also received 28.2 per cent of the 71,513 L-1 visas that were issued.
Sitharaman said: "At the moment, even as I say this, I know the visa fees of the United States for our IT specialists who are going over has increased, much to our appeals against them."
Aside from increasing visa fees, additional costs levied against Indian IT workers are creeping in, including a requirement to pay upfront social security fees upon entry to the US. Most Indians receive no benefits from these fees because the visas don't allow workers to stay in the country beyond seven years (less for most of the visas). To benefit from these social security fees you need to spend at least ten years in the US. In addition because India has been unable to agree a totalisation agreement with the US Indians are unable to benefit from these social security payments if they go back to India,
Speaking to the audience at the 'Invest Karnataka' event, attended by several heads of Indian IT companies, Sitharaman said: "I'm fighting for the rights of Indians and we will not lose out, be assured."
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