INDIA - IT/ITES Companies Exempt from 1% Foreign Worker Quota
- India
- 07/07/2010
The Indian Ministry of Home Affairs (MHA) recently clarified its December 2009 regulation which made all Indian host companies subject to a 1% quota for Employment (E) visas issued to foreign national workers. Effective the week of June 7, The MHA has forwarded new instructions to Indian consular posts abolishing the 1% quota for applicants filing E visa applications that are sponsored by registered Information Technology (IT) and Information Technology Enabled Service (ITES) companies in India.
In December 2009, the Indian Ministry of Labor and Employment (MOLE) issued a new regulation limiting the number of foreign nationals allowed to work at a particular host company or project (i.e., the 1% quota rule). The exact wording of this regulation can be found at the following web link:“http://pib.nic.in/release/rel_print_page1.asp?relid=56059”:http://pib.nic.in/release/rel_print_page1.asp?relid=56059.
As of June 7, Indian IT and ITES companies are now free to sponsor foreign workers based on actual need versus an imposed quota. There is a broad range of interpretation in India as to what qualifies as an IT/ITES company. Therefore, prior to submitting an E visa application under this new regulation, the sending company should confirm that the Indian host company has appropriate corporate registration (e.g., Certificate of Incorporation from the Registrar of Companies), and that the host company is recognized in India as a bona fide IT/ITES company.
The new MHA instruction generally advises Indian consular posts of the following:
- There is no “1% quota” on E visas issued to foreign workers assigned to a qualified IT/ITES Indian host company. (NOTE: The MHA may issue further clarification on what qualifies as an IT/ITES company, and it could include companies that are located in Software Technology Parks in India (STPI) or Special Economic Zones (SEZ) that are dedicated to IT development purposes); and
- E visas sponsored by IT/ITES companies can be issued for up to three years initially, with an additional two-year extension available for a maximum, total duration of stay of up to five years. This will avoid the traditional 12-month visa extension process.
The following general conditions are required of the Indian host company:
- The company must have a valid Certificate of Incorporation and declare in its sponsoring letter that it is an IT/ITES company;
- The company is either an Export Oriented Unit (EOU), or an STPI unit, or an IT unit delivering services located in an SEZ;
- Foreign workers must earn a minimum annual salary of US$25,000; and
- Foreign workers who do not qualify to apply for this new type of E visa are applicants submitting passports issued by Afghanistan, China [People’s Republic of China (PRC)] and Sri Lanka as well as nationals of Pakistan and persons of Pakistani origin.
BAL Comment
The MHA’s decision to abolish the 1% quota rule for Indian IT/ITES companies signals that the Indian Government is closely regulating industries deemed critical to the Indian economy. In areas of the economy not deemed to have critical foreign worker shortages, the 1% quota is expected to remain in place. BAL will further advise on the specific visa application requirements communicated by the MHA to the Indian consular posts once this information is made available.
