Sanjeev Ahluwalia | Trump’s H-1B Shock Jolt To Indian Techie Dreams

President Donald Trump has roiled lives in India yet again by undermining the road to tech opportunities in the United States for outstanding STEM foreign professionals. This route -- the H-1B visa which allows “alien” professionals to be hired by American or multinational companies -- was the favoured route for Indian professionals to work in the US and, over time, start their own tech companies. The work was hard, but the pay was good and opportunities endless in the $10 trillion US tech space -- all quintessential business check points for young techies.

Of the 1.5 million Indian engineers graduating every year, only a miniscule 0.25 per cent can avail of this opportunity to work overseas. But this small community working in the US is a much sought after influencer, and the downward social links permanent, inspiring many Indians to similarly become high achievers. This was not a one-way street. US tech also benefited from cost-effective, competitive Indian tech talent. But it was doomed to implode once the world shrank, free trade regulated by the WTO became a distant possibility and trade wars replaced trade partnerships.

Ironically, jobless workplaces -- the tech vision of the future -- enrages the young and jobless everywhere. For the MAGA supporters of President Trump, this is a major pain point and immigrant talent becomes the fall guy. This much is clear from the September 19 fact sheet issued by the White House. It says: “American workers are being replaced with lower-paid foreign labour, creating an economic and national security threat to the nation. The share of IT workers with H-1B visas has risen from 32% in FY 2003 to over 65% in recent years. Unemployment

among recent computer science graduates has reached 6.1% and 7.5% for computer engineering graduates -- more than double the rates for biology or art history majors. The number of foreign STEM workers in the United States has more than doubled between 2000 and 2019, while overall STEM employment only increased 44.5% during that time. American companies are laying off their American technology workers and replacing them with H-1B workers. American IT workers have even been reportedly forced to train their foreign replacements under non-disclosure agreements. The H-1B programme is creating disincentives for future American workers to choose STEM careers, which threatens our national security. President Trump is imposing higher costs on companies seeking to use the H-1B program in order to address the abuse of the programme, stop the undercutting of wages, and protect our national security.”

The fact sheet cites six specific instances, from this year, where the issue of new H-1B visas corresponds with the layoffs of American workers, including one where a company reduced its US workforce by 27,000 since 2022 whilst receiving 25,075 H-1B approvals.

In conformity with President Trump’s signature formula for reform of malpractices, the fee for an H-1B visa has been hiked by twenty times to $100,000 from September 20. This is a one-time fee, not payable by those who already have such visas. Nor is it payable by those returning to the US on valid H-1B visas and, most importantly, it is to be paid by the hiring company and not the worker. The intent is to earn revenue for the government, whilst also incentivising the employment of American professionals over the import of foreign professionals -- consistent with the MAGA principles of making the US self-sufficient.

This well-crafted American initiative will ensure that only very highly specialised foreign professionals are hired. On an employee earning $2.4 million a year, the additional company expense is just two per cent. But it will bite and make unviable hires with earnings ranging between about $80,000 -- the average for Indian IT companies employing engineers offsite, or the $100,000 paid by midsize US firms and even the average $150,000 paid by US tech giants. This effectively narrows the demand for H-1B visas.

L1 visas are an alternative, initially available for one to three years but extendable to five to seven years. But these are tied to a single employer, so more restrictive from the employee’s perspective. The upside is that there is no limit on the number of L1 visas issued in a year, unlike the H-1B, where about 70,000 are issued annually and Indians have been the primary beneficiaries in recent years. Under the L1 visa, the spouse gets automatic work authorisation, unlike H-1B visas where a separate work authorisation is required. For highly qualified, “double engine” couples, L1 seems the ideal option. The only catch is that a one-year work experience in the United States is a minimal qualification.

The more sustainable option for Indian and multinational corporates is to invest in global capacity centres, friend-shored in India. About 2,000 such GCCs exist already, and two-thirds of their employees are engineers. Wages are naturally lower than in the US but enough to put any employee on the path to eventually join the dollar millionaire club in India, comprising about 900,000 persons -- a far cry from the six million club members in China or the 25 million members in the US -- but growing faster than either. Viewed from this perspective, the disruption to “good “employment for Indians is minimal and far less severe than the recent Trump tariff induced trade disruptions in high employment exports like carpets, textiles, and apparel.

Prime Minister Narendra Modi, while conveying his Navratri greetings on September 21, reminded Indian voters that the government had already given them a gift worth Rs 2.7 trillion via reduced income-tax in this year’s Budget and reduced GST rates from September 22. He also added that being Indian means buying Indian. Reciprocal “Atma Nirbharta” by India and its global partners, whilst a sign of these fractured times, makes for rocky trade and investment relationships, and uncertain global prospects.

It is yet another warning that dependence on overseas remittances and jobs, as in Kerala, and the mega labour marts of Uttar Pradesh and Bihar, is a ticking time bomb. It is also a wake-up call for large Indian industry, that it is high time they paid back in more good jobs, for the profits they earn from the corporate tax relief of 2019 and the doubling in market valuation of their enterprises since then, on the back of prudent and safe fiscal management by the Reserve Bank of India and the government. There is never a free lunch.

The writer is Distinguished Fellow, Chintan Research Foundation, and was earlier with the IAS and the World Bank