Context

In a huge blow to Indian IT professionals eyeing the US job market, President Donald Trump signed an executive order preventing federal agencies from contracting or subcontracting foreign workers -- mainly those on H-1B visa -- from hiring.

About

What is H-1B visa?

• The H-1B is a visa in the United States under the Immigration and Nationality Act, which allows US employers to temporarily employ foreign workers in speciality occupations.
• A speciality occupation requires the application of a specialised knowledge and a bachelor's degree or equivalent of work experience.
  • The duration of a stay is three years and can be extended up to six years.
  • Once this period is over, the visa holder will need to re-apply.
• The law says that employers must generally withhold Social Security and Medicare taxes from the wages paid to employees in H1B visa status.
• A person in the H-1B visa status must continue to be employed by the employer in order to stay in the H-1B status.
• In case the employment ends for any reason, the employee must be leave the United States, unless the person applies for and is granted change in status or finds another employer with the H-1B status.
• Apart from the H-1B visas, the US government also issues L1 visas which allow companies to transfer highly skilled workers to US for a period of up to seven years.
• H-2B visas allow food and agricultural workers to seek employment in the US.

Background

• The move came over a month after the Trump administration in June 23 suspended the H-1B visas along with other types of foreign work visas until the end of 2020 to protect American workers in a crucial election year.
• The new restrictions took effect from June 24.

The impact on Indians:

• The proclamation issued will immediately affect the processing of all new H-1B, H-2B, J and L visa categories.
• This would mean that those who do not have a valid non-immigrant visa as of June 23 and those who are outside the US, will not be allowed to enter the country until December 31 2020.
• While about 70% of the H-1B and L-1 visas are granted to Indian nationals, this June Ban is unlikely to have a major, immediate impact on Indian IT/ITeS companies as only a relatively small number of H-1B employees will be affected.
• However, those workers in essential services in the food sector have been given a reprieve and their entry shall be decided by the consular officer of the immigration services.
• Suspension of the H1-B visas by the US will cost domestic IT firms Rs 1,200 crore and have a marginal 0.25-0.30 per cent impact on their profitability.
• The new order however will not impact H-1B, H2B, J and L visa holders and their spouses or children who are already in the US.