Congress set to make the H-1B visa less costly for India

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A $2,000 fee aimed at India offshoring firms is soon to expire

Congress is set to drop a $2,000 H-1B visa fee mostly paid by India-based IT services providers. It's a move being met with incredulity by H-1B critics, but relief by the Indian offshore industry.

The fee, adopted in 2010, was sought by U.S. Sen. Chuck Schumer (D-N.Y.), who chaired the Senate immigration subcommittee when Democrats were in power. Schumer described the overseas firms as "multinational temp agencies" that undercut U.S. wages.

The fee expires on Oct. 1, the start of the new fiscal year and there's is no immediate effort in Congress to extend it. The fee raises between $70 million and $80 million annually for the U.S., according to an Indian industry trade group. The money initially went to improve border security, but is now used to help pay the medical needs of 9/11 first responders.

Russ Harrison, director of government relations of the engineering association IEEE-USA, said eliminating the fee makes no sense, particularly after lawmakers in both parties have expressed outrage over the use of H-1B workers in recent layoffs.

"We had half of Congress tripping over itself trying to get in front of the camera to tell the American public how upset they were about SCE (Southern California Edison), Walt Disney and all the other companies that have used this visa to eliminate American jobs," said Harrison.

Now, "the only thing Congress is going to manage to do is to make (the H-1B visa) cheaper."

"A middle-class American job is worth a lot more than $2,000 and companies are making tens of thousands of dollars, per visa, per year, off this thing," said Harrison, who would like to see the fee raised.

It's not clear why lawmakers aren't acting on the fee -- or even talking about it. Lawmakers contacted, including Schumer, have not responded to requests for comment. Even if Congress lets the Oct. 1 date slip, legislators could still act later.

The $2,000 fee did not affect H-1B-using firms as such as Facebook, Google and Microsoft. It only applies to firms with at least 50% of their employees on visas. Indian offshore firms, the heaviest users of the visas, were the legislative target.

The president of NASSCOM, India's IT industry trade group, R. Chandrashekhar, believes the fee is unjustified.

"It had nothing to do with the IT industry, and, second, it was applied in an inequitable way, which specifically targeted Indian companies," Chandrashekhar said in an interview. Eliminating the fee "would be a welcome development."

The Indian "IT industry contributes to the U.S economy in many different ways, but these are not fully appreciated or understood," said Chandrashekhar. The industry group wants lawmakers to see its IT industry in the context of bilateral trade, and released a report Monday detailing what it sees as the benefits of this trade.

The $2,000 fee, which also applies to the L-1 visa, was originally set to last for four years with the money from it helping to pay the cost of Mexican border security. That was later changed so the money helped fund the costs associated with the James Zadroga 9/11 Health and Compensation Act.

Ben Chevat, the executive director of Citizens for the Extension of the James Zadroga Act, said they aren't involved in the H-1B issue, but are concerned about the renewal of the Zadroga Act. That legislation, approved in 2010, was also set to last five years. It allowed more than $4 billion, paid by the visa fees and a fee on government procurements on companies located in other countries, to help 9/11 first responders.

The Zadroga Act is named after a police officer who later died from a respiratory illness attributed to the 9/11 attack.

Jon Stewart, the former host of The Daily Show, was in Washington last week to lobby for the Zadroga Act extension, but the outcome of that effort remains as uncertain as the future of the visa fee.

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