US President Donald Trump
US President Donald Trump

New York: US President Donald Trump has suspended till the end of the year the H-1B visas prized by Indian professionals and announced a far-reaching reform plan that could deal a blow to Indian companies that place technology workers in US companies.

The freeze ordered by Trump on Monday will not affect those already in the US on the H-1B and other work visa categories.

Making the announcement, the White House said that Trump wants to reform the immigration system into a "merit-based" one. Briefing reporters about the reform plan, a senior official said that one of its features would to ban companies from bringing in employees on H-1B visas and outplace them to work in other US companies.

Many Indian -- and some US -- companies that act as subcontractors sponsoring workers on H-1B visas and deputing them once they are in the US to work elsewhere could see their business model hit.

The official said that another reform would change the way the 85,000 annual H-1B visas are given from the current lottery system to one where the wages will determine who gets them. Those offered the most wages will get priority instead of those hitting "a lucky number" in the lottery, the official said.

Indians are the single largest group of H1-B visa-holders accounting for nearly 74 per cent of the work visas. The official said that Trump wants the wage structure for H-1B visas to be changed from the current one set during the administration of former President Bill Clinton, and the new minimum will be the 50th percentile of the national income.

When Trump imposed a 60-day pause on permanent immigrant visas or green cards on April 22, the H-1B and other temporary work visas escaped the freeze but are now affected.

The green card restrictions, which do not apply to spouses and children of immigrants, will also continue until the end of the year.

However, those in the healthcare field and those considered important for national security will be exempt and continue to receive visas, as will farmworkers and nannies.

The White House has linked the freeze to the high unemployment level in the US because of the COVID-19 pandemic saying that the pause is to "ensure we continue putting American workers first during our ongoing coronavirus recovery."

The official said the pause would help workers already in the country get access to more than 525,000 jobs.

US businesses -- particularly in the Silicon Valley -- have opposed restrictions on the visas and asserted that they would, in fact, affect the nation's economy, where immigrants and those on work visas have disproportionately been founders of companies, besides holding up America's global leadership in technology.

The Indian government considers restrictions on H-1B an important issue and External Affairs Minister S Jaishankar said in December that he had told US officials that the visas "should not be obstructed."

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