New Delhi [India], September 20 (ANI): Former senior Indian diplomat Mahesh Sachdev on Saturday described US President Donald Trump's proclamation of imposing a USD 100,000 annual fee on H-1B visa applications as a 'two-edged sword', warning that it could undermine America's IT innovation while significantly impacting Indian companies reliant on the US market, though it may also spur outsourcing and local hiring strategies in response.

Commenting on the proclamation signed on Friday, Sachdev said that the move also appears largely aimed at appeasing Trump's political base, which often alleges that foreign workers are displacing Americans from well-paying jobs. However, he pointed out that this narrative rarely examines whether H-1B holders are hired because of their lower wages or because of their higher levels of efficiency and professionalism.

'I think it's a two-edged sword. At one end, it is there to please his MAGA base, where it's often exaggeratedly alleged that foreigners are taking away well-paid jobs in the United States that American citizens should be doing. Examples are cited of companies firing American citizens solely to hire H-1B personnel. It is not often clarified whether this is due to lower wages, higher efficiency, or greater professionalism of H-1B people,' the former diplomat said.

'America, particularly in the IT and new technology sector, is a highly competitive country, and it is a highly innovative country. It needs talent, and by putting such audience restrictions, Americans are not serving their own IT industry,' he added.

The proclamation, effective from September 21, restricts H-1B entry for workers outside the US unless employers pay the annual fee of USD 100,000, potentially totalling USD 300,000 over a three-year visa period.

The measure aims to combat what the administration calls widespread abuse of the H-1B programme, particularly by IT outsourcing firms accused of displacing American workers and suppressing wages.

Sachdev highlighted the outsized impact on India, which accounted for 71 per cent of H-1B approvals last year, making its IT companies the primary beneficiaries of the programme.

'On the other hand, coming to India and its impact, I think our IT companies were major beneficiaries of the H-1B visa scheme. Indian passport holders accounted for 71 per cent of the total beneficiaries of the H-1B scheme last year... This may have an impact on Indian companies that count the United States as their biggest market for IT outsourcing,' he noted.

To mitigate the fallout, Sachdev suggested multiple strategies for Indian firms, many of which have operations and clients in the US.

He noted that there would likely be an increase in work being outsourced directly to India to avoid the high visa costs. Companies may also intensify their local hiring efforts within the US, either by employing Indian-origin professionals already based there or by hiring American citizens and other foreign nationals. At the same time, he said, there is a strong possibility of legal pushback.

'To deflect this kind of restriction, multiple strategies would be required. Firstly, outsourcing the work to India would increase. Secondly, local hiring of Indians who are already there or foreigners or American nationals would increase instead of bringing people from India, and I think there is also a likelihood of a judicial review of this decision because this apparently does not conform to the powers of the United States government,' he stated.

On Friday, the US President issued a new presidential proclamation titled 'Restriction on Entry of Certain Nonimmigrant Workers', imposing a USD 100,000 annual fee on H-1B visa applications. The measure, effective from September 21, aims to combat what the administration calls widespread abuse of the H-1B programme, particularly by IT outsourcing firms accused of displacing American workers and suppressing wages.

The proclamation argues that the original purpose of H-1B, to bring in highly skilled foreign talent, has been distorted, with the administration claiming that low-wage, entry-level H-1B hires have harmed American graduates and also highlights national security concerns, pointing to investigations into visa fraud and money laundering involving companies that rely heavily on the programme.

As per the order, employers must now provide proof of payment when filing H-1B petitions, with enforcement overseen by the US Departments of State and Homeland Security. Limited exemptions are available for cases deemed in the national interest. (ANI)