H-1B Visa - Why a new US visa bill is causing panic in India?

What is the H-1B visa?

H-1B is a type of US visa that allows skilled foreigners - mostly technology workers - to work in the US.

The applicants must have at least a bachelor's degree, with a master's degree required for 20,000 of the 85,000 H-1B visas issued annually.

This non-immigrant visa lets a firm employ foreigners for up to six years in positions for which they have been unable to find American employees.

The H-1B visa holders can apply for permanent residency in the US and buy property in the country.

In 2016, Richard Verma, then US ambassador to India, said an estimated 70% of these visas go to Indian citizens.

However, the demand for these visas is three times higher, and H-1B visas are allocated by a lottery system.

Why does the US want this new law?

Several bills and a draft executive order are attempting changes to - or curbs on - the H-1B programme.

The High-Skilled Integrity and Fairness Act of 2017, introduced last week in the House of Representatives by California lawmaker Zoe Lofgren, a Democrat, calls for replacing the lottery system with a preference for companies that can pay the highest salaries.

It suggests raising the effective minimum wage for an H-1B visa holder to over $130,000, more than double the current $60,000 level established in 1989. Exemptions, though allowed, are rare.

The bill says the visa programme "has allowed replacement of American workers by outsourcing companies with cheaper H-1B workers" and aims to end the "abuse" of the programme.

Why does this worry India's IT industry?

The proposed new legislation mainly targets companies not based in the US that bring in foreign employees on the visa quota.

The doubling of the minimum wage applies to "visa dependent employers" or companies with more than 15% of US employees on H-1B visas.

It excludes American firms such as IBM or Accenture, allowing them to bring in H-1B holders at the older minimum wage, because they would have less than 15% of US employees on H-1B visas.

This effectively targets Indian outsourcing firms and the National Association of Software and Services Companies (Nasscom) has described it as "discriminatory".