US President Donald Trump’s announcement this week cancelling H1-B and other related visa categories until December 31 has sent shock waves in the Indian IT industry. Taken aback, India is assessing the impact but has admitted that the decision will affect the movement of skilled Indian professionals.

Reacting to the move, External Affairs ministry spokesman Anurag Srivastava said “the US has always welcomed talent”. India also said it “hopes” that Indian professionals will “continue to be welcomed in the US in the future”. The visa suspension affects the H-1B, H-4, and H-2B, L-1, L-2, J-1 and J-2 visa categories.

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However, the entire J visa programme is not impacted. Immigration has always been an issue with the United States as the Indian immigrant population has been increasing steadily. From just about 12,000 immigrants in 1960, their number has gone up to about 4 million today.

The majority of them are young and highly educated, and possess English language skills. Indian immigrants are significantly better educated and have higher household incomes. Every time an Indian prime minister meets US leaders, the H1-B visa is one of the major issues on the table. India has been seeking more H-1B visas and this curb would hurt the IT industry.

New Delhi noted that high-skilled Indian professionals bring important skill sets, bridge technological gaps and impart a competitive edge to the US economy. It reminded Washington that “they have also been a critical component of the workforce that is at the forefront of providing Covid-19 related assistance in key sectors, including health, information technology and financial services”.

No doubt Trump’s decision is a blow to several technology companies in India, which depend on outsourcing of American companies. When India is reeling under a serious economic slide, it is a big blow to IT companies like Infosys, TCS, Tech Mahindra and HCL tech. According to a Reuter’s analysis of data from U.S. Immigration and Citizenship Services, Microsoft, Facebook, IBM, Apple, Intel, Cisco Systems and Oracle are among the other top recipients of H-1B visa holders.

The immediate impact in India was a steep fall of the shares of Indian IT companies in the stock market the day after the announcement by Trump. There are about 400,000 H-1B and 100,000 L-1 Indian visa holders in the US employed in several tech and IT firms. According to the latest estimates, out of 85,000 H-1B visas the US issued every year, India got about 60,000.

Also spouses and children often accompany temporary workers and the former also compete with American workers. It is not surprising why the US President has resorted to this move. His views on outsourcing of jobs to non-American companies are well known, as he believes in ‘America First’. He spoke about how non-Americans were cornering jobs meant for Americans and had come down heavily on outsourcing during the 2016 campaign.

This view is repeated in his 2020 presidential campaign also. While announcing the decision, Trump justified that the visa suspension was aimed at helping the coronavirus-hit economy and reduce unemployment, pointing out that between February and April 2020, more than 17 million American jobs were lost in industries in which employers are seeking to fill worker positions tied to H-2B non-immigrant visas.

Trump claimed that the move would benefit about four million Americans. He said, “The coronavirus had significantly disrupted Americans’ livelihoods and the overall unemployment rate in the United States nearly quadrupled between February and May of 2020 — producing some of the most extreme unemployment ever recorded by the Bureau of Labor Statistics.” Trump is seeking a second term in November.

Before the outbreak of the virus, many thought that he would win easily because his support base among the whites was secure and the economy was doing well. In the past few months, Trump has faced criticism from Democratic opponents for his handling of the pandemic. Today the US has the highest number of Coronavirus cases and the peak is yet to reach. More than 10 million undocumented aliens are currently living in the USA as of 1 April 1 2020.

The US Citizenship and Immigration Services (USCIS) received about 2.5 lakh H-1B work visa applications and Indians made up 67 per cent (1.84 lakh) of these in the current financial year. The coming months are going to be a big test for the Indian IT industry as outsourcing from two major sources – US and Gulf countries will be hit and remittances from abroad would be reduced considerably.

The service industry needs a big boost and the government has to devise ways to deal with it. Indian companies too should find new ways of finding jobs for workers. New innovations for the virtual world would go a long way. It is said that trouble does not come alone. For the Indian economy, this seems to be true.