H-1B Fee Hike: New Strain in India–US Relations

India is currently facing a challenge in determining whether US President Donald Trump and his policies are beneficial or detrimental to its interests. Mr. Trump's frequent shifts in stance towards India imply that he prioritizes other factors over friendship in the US-India relationship. His policies indicate that Indian professionals in the US IT sector are seen as a threat to local American employment. Moreover, since his re-election, the US has been adopting economic policies that are anti-globalization and protectionist, under the guise of American nationalism. Following a 50 percent increase in tariffs on Indian imports, Mr. Trump has also raised the H-1B visa fee to $100,000 (Rs. 8.8 million) annually, which will significantly affect young Indian tech professionals seeking jobs in the US IT sector. This decision was made just a day before India's Commerce Minister Piyush Goyal is set to visit the US to discuss tariffs.

Increasing visa fees means that companies employing foreign IT engineers and other technical staff in the US will be required to pay this amount to the US government per employee. Currently, visa fees range from $2,000 to $6,000 annually. The visa is valid for three years, with an extension of three years. Indians constitute 72 percent of those who travel to the US for employment under this visa. Between October 2022 and September 2023, more than 400,000 Indians received this visa. Indian IT companies like TCS, Infosys, Wipro, and HCL have obtained this visa for approximately 20,000 employees. Meanwhile, the US government maintains that the implementation of the new visa fees will benefit American citizens and increase job opportunities for them. In the technical field, young people coming from abroad are willing to work for relatively low salaries, while American citizens earn higher salaries. Typically, middle-level employees from abroad or India earn an annual salary of $66,000, while the average American earns $75,000.

According to the US government, the number of foreign workers working in science and technology-related fields has increased significantly over the past two decades, despite the sector's growth rate remaining relatively high. Between 2000 and 2019, the number of foreign tech workers more than doubled, with the sector's growth rate hovering around 44 percent. From 1.2 million in 2000, the number increased to 2.5 million in 2019. During this period, the share of foreign workers in this sector increased from 17.7 percent to 26.1 percent. The government claims that the misuse of H-1B visas is the primary reason for this increase. The US government claims that companies operating in the IT sector alone have misused this visa facility the most, resulting in the greatest losses for American workers in this sector and the lack of adequate employment. According to the government, the number of foreign workers coming to the US under this visa system has increased significantly in the past few years. While the total foreign workforce in this sector was approximately 32 percent in 2003, their number has increased to 65 percent in the last five years.

It is a well-known fact that young Indian engineers and technicians are the majority employed in this sector. Furthermore, IT outsourcing companies use visas to increase their profits or savings. This is harming the employment of American workers, as they are able to find foreign workers at lower salaries. According to Will Short, Secretary of the White House, the US President's office, this visa program was established to attract top-level talent from abroad, but it has been exploited in other ways. Therefore, the original goal of increasing the visa fee to $100,000 was to ensure that only high-level professionals come to work in the US, thus avoiding the loss of ordinary American workers. However, a more disappointing picture emerges when viewed in the context of India. The average average Indian employee in the US earns an annual salary of $66,000. So why would employers be willing to pay a fee of $100,000 annually for this? This would obviously discourage employers from hiring Indians. According to Trump's ideology, this move would directly benefit Americans.

The question now is whether Trump is doing all this to woo American voters. His Republican Party is considered a conservative nationalist party. He had sharply criticized the H-1B visa scheme in 2016, even during his previous term. He has always considered it against American national interests. Therefore, he may have American public support on this issue. However, America has also been a pillar of economic globalization, and it is its responsibility to avoid protectionist measures, as doing so would lose its leading role in this field. However, Trump's stance is not in India's interest in any way. Therefore, India must formulate a concrete response on this issue while safeguarding its national interests.