While the specific provisions of the spending bill has no mention of Indian IT companies, the language of the bill has been written in such a way that it would have a big impact on Indian IT companies.
The US Congress has imposed a special fee of up to $4,500 on the H-1B and L-1 visas popular among Indian IT companies to fund a 9/11 healthcare act and biometric tracking system.
Congressional leaders, while agreeing on the $1.1 trillion spending bill, yesterday decided to impose a special fee of $4,000 on certain categories of H-1B visas and $4,500 on L-1 visas. The US House of Representatives is slated to vote on the $1.1 trillion spending bill deal tomorrow.
The money generated, expected to be more than a billion dollars per annum, would be used to fund a biometric entry and exit tracking system, in addition to funding health screenings and treatments for 9/11 first responders.
According to the agreed bill, the new $4,000 fee would apply to companies having at least 50 employees with 50 per cent of their employees on H-1B or L-1 visa. Such companies would have to pay a new fee of $4,000 for H-1B visas and $4,500 for L-1 visas.
While the specific provisions of the spending bill has no mention of Indian IT companies, the language of the bill has been written in such a way that it would have a big impact on Indian IT companies.
Though the lawmakers behind the bill described it as a temporary provision, the new H-1B and L-1 visa fee increase is for a period of 10 years as against a previous provision of five years. The previous such provision from 2010 to 2015 of $2,000 for H-1B visas lapsed on September 30.
In a study released in September this year, NASSCOM, a trade association of Indian IT industry, said Indian IT companies have paid between $70 to $80 million annually for the US Treasury approximately. Given that, the new punitive measure is expected to raise between $1.4 billion and $1.6 billion every year for the next one decade.
Expecting that this provision would generate more than $1 billion per annum, the bill says that after $1 billion is deposited for 9/11 first responders and the Biometrics Ext account, the rest of the money would be deposited in the general fund of the Treasury.
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Prime Minister Narendra Modi had raised the issue with US President Barack Obama when the latter telephoned him to thank for his leadership role on achieving the historic agreement on climate change in Paris on December 12.
It is learnt that the White House did raise its concerns with the Congressional leaders on the impact of such a move to dramatically increase H-1B and L-1 visas fees on India-US relationship. However, the Republican-majority Congress decided to ignore the concerns of the White House and doubled the H-1B and L-1 fees for Indian IT companies.
The $1.1 trillion spending bill includes $548 billion in defence spending, $518 billion in non-defence spending, and $73.7 billion in additional funds for the Pentagon for ongoing combat operations. The bill provides funding for the next fiscal year, through September 30 next year.