Anger Grows in India over U.S. Visa Rules

It's protectionism, say Indian critics, that Congress has banned companies receiving bailout money from hiring foreigners on H-1B visas

By Mehul Srivastava

With the economies in the U.S. and India both struggling and with unemployment rising, the outsourcing of American jobs to Indian workers has become an even more explosive issue. That's leading business leaders, politicians, and ordinary citizens in both countries to focus on a controversial visa program, the H-1B, that allows a limited number of foreigners to work at U.S. companies for up to six years. Critics have long claimed the program allows high-paying software-writing and engineering jobs at companies and state governments to go to foreigners.

On Feb. 23, the H-1B critics got a new round of ammunition. Data released by the U.S. Citizen & Immigration Services showed that in 2008, for the second year running, many of these visas went to Indian IT services companies that were sending engineers to the U.S. temporarily to work. In effect, a visa that had been designed for U.S. corporations to remain competitive at a time of talent shortage had become a blessing for the U.S. operations of global Indian companies, allowing them to send engineers from India, rather than hiring locally.

The news comes at a time when many Indians already suspect the U.S. is trying to put a squeeze on the country's successful outsourcing industry. Each year, the American government hands out 65,000 H-1B visas, and Indian engineers receive many of them. However, as part of President Obama's economic stimulus package, Congress passed provisions to bar any U.S. company that receives bailout dollars from directly hiring workers on these H-1B visas.

Fueling India's Diaspora

In India, there has been a swift outcry. "This is just irrational protectionism," says Montek Singh Ahluwalia, deputy chairman of India's Planning Commission. "It makes no economic sense at all."

In the 15 years since the H-1B began, a strong U.S.-based Indian diaspora has emerged, in part because of the visa program, to become one of America's most successful minority groups. It has also become politically powerful within India. Many Indians in the U.S. are strong supporters of the Bharatiya Janata Party, leader of the opposition to Prime Minister Manmohan Singh's government; U.S.-based Indians often make donations to BJP causes and lobby through its parent body, the Vishwa Hindu Parishad (Global Alliance of Hindus). Courting nonresident Indians has been a consistent fundraising tactic for the BJP and VHP, especially since a large proportion of the Indian diaspora in the U.S. comes from Gujarat, a state north of Mumbai where the BJP holds power and is more popular than elsewhere in the country.

So as news trickled in about the provision in the stimulus bill, political groups in India swung into action. The VHP first asked India's External Affairs Minister Pranab Mukherjee to see if he could arrange for Indians losing their H-1Bs to have more than the regulated 30 days to leave the U.S., allowing them to sell their houses and settle their affairs with more flexibility. A spokesman for Mukherjee says no action has been taken on that letter.

Call for a Boycott

Then, the VHP decided on a more popular approach, calling for Indian consumers to boycott the goods of 14 U.S. multinationals. Praveen Togadia, general secretary of the VHP, declines to share the list of the companies the group plans on targeting. He says a boycott is justified. "If these policies hurt Indians abroad, then we have to take steps to hurt American companies in India," he says. "The reaction must be strong, or else who knows if the legally resident Indians in the U.S. are one day thrown out."

Unlike the BJP, the Indian government is trying to take a less confrontational approach, with New Delhi taking what the Overseas Indian Affairs Ministry calls a "holistic view" of the visa issue.