A Year of Change Under the Trp Administration:-
Ever since Donald Trp took over as president at the beginning of this year, his administration has announced policy after policy that affects Indians directly, specifically Indians working and living in the US. He’s tightened citizenship rules. He’s imposed a 50% tariff on goods that India is exporting. He hiked the H-1B visa fees to $100,000. Ended automatic renewal of work permits. And in the latest proposal, there’s something called a higher act that’s been tabled in the US.
Major Policies Affecting Indians:-
It introduces a 25% tax on outsourcing payments for anything any work that has been outsourced outside of the US. Now, this is still a proposal. It’s being pushed through, but it’s very interesting for India to pay closer look at what is going on. So the US Department of Homeland Security has officially ended automatic extension of employment author authorization docents or EADs for all foreigners. This is according to a press release that came out from citizenship and immigration services. Now, until now under the rules under the Biden administration, what would happen is a foreign worker had to apply for an EAD, which was your employment authorization docent.
End of Automatic Work Permit Renewals:-
And if you had applied on time, you were granted a 540day extension of that authorization until the application was processed. Under the new Trp era rule, this automatic extension has been withdrawn completely, which means that every applicant must now undergo a fresh round of screening and wedding before their permit is renewed. According to the DHS statement, which has been released to the press, it says that working in the United States is a privilege and not a right. So, it’s not something that you can take for granted. And this means that your existing work permit if it expires before your renewal is approved effectively you lose the right to work even if your renewal application is still pending. Now there is an issue with this because there’s a huge backlog of pending applications.
Who Is Affected the Most?:-
This will primarily affect the spouses of H1B visa holders. So those on the H4 visa also spouses of the L1 or the E visa holders and students on optional practical training or OPT. Now why this is for all foreigners but Indians obviously will feel the worst of it because Indians make up 71% of H1B visa holders and so one would asse that their spouses also are largely Indian. According to the US Census Bureau, 4.8 8 million Indian-Americans live in the US right now of which 2/3 are immigrants and many of them are on temporary visas including H1B visas or H4 visas which depend on timely EAD renewals to actually be able to work now these are the people who are working what about the students they will be affected too because they formed 27% of the total foreign students in the US and they will be this will particularly apparently hit students, those who are in STEM, so in science, technology, engineering, and mathematics, in the OPT programs, delayed renewals will mean losing jobs, losing internships.
The Backlog Crisis:-
One immigration lawyer, Henry, , Linia told Manifest Law at Hindustan Times , that starting now, everyone will lose work authorization if their renewal isn’t approved before the card expires. Now, here’s the problem. Processing these renewals takes anywhere between 3 months to 12 months depending on the type of visa, the location in which you have applied making employment interruptions now almost inevitable that there is going to be an issue for almost everyone at some point when the renewal comes up. Now what advice are you getting? The USCIS has advised applicants to file their renewals at least 180 days before their papers expire. warning that there could be delays and that would result in gaps in employment. But really filing early doesn’t really fix the problem because processing delays frequent policy changes. And here’s the challenge, right? The fact that we’re constantly hearing new things and an increasingly hostile political environment when it comes to temporary immigrants.
The Bigger Message: A Shrinking Welcome Mat:-
Millions of Indians who are currently studying, working, building businesses in America. The message from Washington appears to be that the welcome act is still here but it’s shrinking every week and becoming more and more difficult. There’s a feeling of not being entirely welcome in the country. Now that is the automatic renewal of employment docents. There’s a new problem. This is called the hire act or the halting international relocation of employment act abbreviated to hire act. It was introduced in the US Senate on the 6th of October by Republican Senator Bernie Moreno of Ohio. The bill seeks to impose a 25% excise tax on any payment made to a foreign entity for services benefiting US customers. So if a US company outsources software development, customer support, accounting to India or any other part of the world, it will have to pay 25% tax.
The HIRE Act: A New Challenge on the Horizon:-
Now the revenue according to this bill proposes the revenue collected goes into a domestic workforce fund to train and reskill American workers in industries that are currently being affected by outsourcing. And the bill has been referred to now a Senate committee on finance. If it passs it would take effect from 1st January. But want to just put a put a clause here. The bill is in very early legislative stages. It needs approvals. It needs committee markups. It needs a full Senate vote. It needs a house approval. And then finally the signature of the president. So it is a long way off. But the sound of what is in that bill is not welcoming.
Where the Tax Revenue Would Go:-
It’s not a good sound for Indians and there are many challenges before this bill. So just looking at the challenges, what are the odds of this bill being passed? About 30 40% in its current form. It’s likely to be changed a lot. But the bill has very broad scope right all outsources services to all foreign. So it it doesn’t seem like it’s actually going to go through just as it is. It’s likely to face a lot of push back from US companies and trade associations. But we’ve seen also that the Trp administration when it wants to just pushes things through.
Chances of the HIRE Act Becoming Law:-
The bill will raise compliance burdens for a lot of companies and it’s also processing risk as well. So this it will be looked at very closely. Now the estimate that most people are looking at is that the chances of it being passed this year in its current form about like I said 30 to 40%. The chance of be becoming a law in the next year after it has been sort of watered down or reduced or changed in some way the other would likely to be 50 or 60%. But as a country as India which is so dependent on outsourcing we need to pay close attention. I’ll give you you know one of the reasons why this popped up on my radar and why decided to do a video on this. Former RBI Governor Raguram Rajan has warned that if this higher act becomes a reality, it will pose a bigger threat to India than even the $100,000 H1B visa hike because it extends tariffs from only goods imported that we saw up till now into the services sector and that is something that’s going to cause a problem.
India’s Outsourcing Industry at Risk:-
Let’s look at India’s nbers right NASCOM’s annual strategic review for this year has said that we have made or we’ve built $224 billion in outsourcing in exporting revenue of which a large chunk comes from the US half of that revenue comes from American clients so if US companies now have to pay an extra 25% tax on everything that they’re sending the work that they’re sending to India it might actually throw the entire proposition out people obviously outsource to India because it’s cheaper but if you’re going to pay a 25% tax on it might not remain cheaper it might actually throw that that entire business model out so they might cut contracts they might renegotiate prices they might move operations elsewhere remember Philippines is giving India quite a run for its money in terms of competition for outsourcing Latin America u you know so this will directly affect companies like Infosys like Vipro likeltech like TCS rely heavily on the American market and that’s going to be a problem. So it’s already something that’s popping up on the radar in India and we’re already slightly concerned about it. But let’s look at the entire picture right now.
A Warning from Economists:-
The US creating a hostile environment for immigrants specifically Indians. According to the National Foundation of American Policy Analysis, August this year, US payroll data, foreignb born labor force has shrunk by 300 by 735,000 since January. So basically from January till August about 7 lakh 35,000 people who were foreigners born outside of America working in America right now lost their jobs. About 1.7 million immigrant workers who held jobs at the start of the year are no longer on US payrolls. economists attribute this not just to tariffs but also a slowing economy, aggressive ICE workplace raids, visa renewal hurdles and just a harder stance on immigration altogether from the Trp administration.
A Shrinking Immigrant Workforce:-
It creates uncertainty for Indians who are on student visas, who are on H1B work permits, who are waiting for their green card. So basically, if you’re not if you haven’t crossed the Rubicon and got into the green card category just yet and you’re still waiting, then every week is a different thing because they keep announcing different things and we’re constantly scrambling to figure out does it affect you, does it not affect you, are you okay, is your family okay, is your spouse okay and apart from making immigration lawyers very sought after, this creates a sense of uneasiness. Now we do know that officially unofficially backroom back channeling u there there are a lot of negotiations currently happening between the US and India on the possibility of a trade deal on the Russian oil that India continues to buy. We’ve heard some sounds from Indian companies not officially from the Indian government but from Indian companies saying okay they’re going to pair down the amount of Russian oil that they are buying.
The Broader Question: America First or Global Isolation?:-
So there is some sort of negotiation going on. There’s a push and pull. People are obviously at the table. Is this new bill a way of pushing leverage at that negotiation table for India because it would mean a lot for the Indian market and for the Indian outsourcing market. So obviously this remains a sort of fluid state of negotiations but for in the meantime for those living in the US it’s a very real fluid state unfortunately that you’re having to deal with and our hearts go out to you. But what we can do is keep bringing it up, keep looking at it, examining it from India’s point of view and giving you you know a clearer outlook of what this means.
Conclusion:-
Are these policies really about protecting American jobs or are they about drawing new boundaries and making America more protectionists? And what does it mean then for those people who want a slice of that American dream? And does it also mean on a completely side note that India should focus a little more on building the Indian dream and making India more attractive for the talent that we would like to retain? We’d like to retain you. But obviously we have a lot of work to be done in order to make India and Indian cities and Indian life more attractive to you.