What does Trump’s H1B Visa change mean for India?

Amid the hue and cry over President Trump’s travel ban, news of another potential change to American immigration rules has set off a panic attack in India’s tech industry.  Major Indian tech shares took a nosedive on Tuesday on reports that Trump is planning to make changes to the H-1B visa program that allows skilled foreigners to work in the U.S.

 Shares in Tata Consultancy Services (TCS), India’s biggest private sector employer, plunged more than 5% on Mumbai’s stock exchange, while other top firms like Infosys (INFY) and Wipro(WIT) fell by more than 4%.  TCS and Wipro declined to comment. Infosys did not respond to requests for comment.

India’s vast outsourcing industry employs millions of people. Its business in the U.S., where it provides engineering and other tech services to firms such as IBM (IBM, Tech30), Microsoft(MSFT, Tech30) and Citibank (C), is highly dependent on the H-1B visa.

The former U.S. ambassador to India, Richard Verma, estimated last year that 70% of the 85,000 H-1B visas issued annually go to Indian workers. The visas, which are currently allocated by a lottery system, are hugely oversubscribed — demand for them in 2016 was three times more than the number available.

Now, that system is under attack on multiple fronts. Three separate bills have been introduced in the U.S. Congress this month aiming to curb the program in various ways.  A new bill wants to give first dibs on H-1B visas to the “best and brightest” foreign students educated in the U.S.  Senators Chuck Grassley and Dick Durbin, both long-time H-1B reform advocates, reintroduced their bill for revamping the program Friday. The bill was first introduced in 2007.

Lawmakers have been debating proposals to change the popular H-1B visa program for years. The visas are in high demand, with three times more applications filed in 2016 than the annual limit of 85,000. But the program has also been highly contentious.

Currently, visas are allocated by a lottery system. But the proposed bill would eliminate the lottery system and task the U.S. Citizenship and Immigration Services with creating a “preference system” so that foreign students educated in the U.S. get priority on visas. It would give a “leg up” to advanced degree holders, those being paid a high wage, and those with valuable skills, according to the announcement.

In so doing, Grassley and Durbin say they’ll weed out outsourcing firms.  H-1B visas are used so that foreign workers can fill skill gaps in the American workforce. However, critics argue that outsourcing firms exploit the system by hiring foreign workers and paying them less than Americans would make for the same jobs.

President Donald Trump has said he wants to crack down on misuse of visas — but it’s unclear how he might do so. Some speculate that the timing of Grassley and Durbin’s bill could be to preempt any actions by Trump on immigration in the coming days.

Also Read: How Trump’s Visa Plans Could Halt India’s Growth

Other elements of the bill, called the H-1B and L-1 Visa Reform Act, include giving the Department of Labor “enhanced authority” to review, investigate and audit employers sponsoring H-1B visas and L-1 visas (for foreigners who’ve worked in an overseas branch of the company and request transfer to the U.S.). It would also establish wage floors for L-1 workers.

Like other proposals on the table, Grassley and Durbin say their bill will both help American workers and crack down on the exploitation of foreigners.

Representative Darrell Issa, a California Republican, introduced a bill earlier this month that aims to make it more expensive and complicated for companies to use H-1B visas. Rep. Zoe Lofgren, a Democrat who represents Silicon Valley, plans to introduce a more comprehensive bill that would award visas based on which employers offer the highest salaries.