ISSUE VII : Fresh curbs on employment visas

Introduction

Close on the heels of the wide ranging changes in the policy regime for granting Business Visas (“BVs”) and Employment Visas (“EVs”) to foreign nationals, on December 16, 2009, the Ministry of Labor & Employment announced new norms for granting EV’s and placed fresh curbs on the maximum number of foreign nationals that can be employed in a project. This bulletin discusses in brief the norms prescribed in the guidelines, it objects and certain grey areas which need to be clarified.

1.0 Norms laid down in the guidelines

As per the guidelines, the number of foreign nationals that can be employed cannot exceed 1% of the total number of persons employed on the project, subject to a maximum of 20. Wherever more foreign nationals are required for any project, the clearance of the Ministry of Labor & Employment is necessary. The Indian embassies and consulates abroad are required to strictly adhere to the prescribed limit and cannot grant any EVs in excess of the prescribed limit.

Additionally, Ministry of Home Affairs (“MHA”) on October 30, 2009 had already issued Frequently Asked Questions on “Work related visas issued by India” outlining in some detail the categories of those eligible and the conditions subject to which BVs and EVs were to be granted. It was clarified that the BVs will be issued to bona fide foreign businessmen who want (i) to visit India to establish an industrial/business venture or, (ii) to explore  possibilities  to  set  up  industrial/business  venture  in  India  or,  (iii)  who  want  to purchase/sell  industrial  or  commercial  products  or  consumer  durables  etc.  according  to provisions of visa manual. EVs will only be granted to skilled and qualified professionals appointed at senior level, skilled position such as technical expert, senior executive or in a managerial position etc. and will not be granted for jobs for which a large number of qualified Indians are available. The guidelines have also been issued to the Indian Missions abroad to effectively regulate EVs and BVs regimes and to ensure that these are issued strictly as per the prescribed norms.

The announcement pertaining to restriction of hiring foreign nationals caused widespread consternation, particularly in sectors such as power & steel, where a large number of foreign experts have been deployed and whose continued presence is considered critical for either the successful running or completion of the project, and which, due to the quantum of capital and investment involved, could potentially cause huge losses. The Ministry of Labor & Employment was immediately deluged by representations from the power and steel sector, which resulted in a prompt upward revision of the maximum number from twenty to forty for these two sectors. The software industry too, was quick to petition the government for a similar reprieve in response to which a committee comprising of officials from the ministries of external affairs, home affairs and labor & employment was constituted to interact with the software industry to ascertain how the announcement impacts them and to suggest remedial measures.

Till now MHA and the Ministry of External Affairs were the two ministries which were involved in the process of establishing the norms for EVs. It appears that now the Ministry of Labor & Employment has become the nodal ministry, particularly for the purpose of evaluating the applications for EVs where the number of foreign national engaged in the implementation and execution of the project exceed the specified maxima.

2.0 Criteria and basis of the approval

The processing by the Ministry of Labor & Employment is done on a case by case basis and as per the specific needs of the industry. With regard to the criteria and the basis for approval, the aforesaid Ministry has specified that the application should clearly specify the bio-data, profile, the skill sets of the applicant, his or her length of experience, the functions to be performed by the applicant in India and the manner in which these functions and the presence of the applicant are critical or essential for the functioning of the project.

3.0 Objects of the guidelines

Clearly, the object of the announcement is to limit the number of unskilled workers entering the shores of India. Apparently, some companies which had been awarded large contracts in India had resorted to importing even their unskilled labor in large numbers which led to the loss of foreign exchange and denial of employment opportunities to the vast pool of unskilled Indian labor. It also seeks to eliminate such applicants who are being called to perform operations and functions for which many qualified Indians are available. To obtain the nod of the Ministry of Labor & Employment, the applicant should be highly skilled and possess some particular specialization which is either unavailable or available only in limited numbers in India.

Evidently, as the Ministry of Labor & Employment is not circumscribed by any numerical limit, it has been receiving, processing and clearing the applications in hundreds for some projects. The practice followed is that wherever the applicant satisfies the above criteria, there shall be no hindrance to their entry. Further, the procedure for evaluation of the applications has been simplified and the processing time considerably reduced. The applications received by the Indian missions abroad are electronically transmitted to the Ministry of Labor & Employment, which has been instructed to process the applications expeditiously and in a time bound manner.

Conclusion

In our view, there still persist certain grey areas in the guidelines. Firstly, the guidelines do not clarify whether overall limit of 20/40 employees applies per project, or whether it applies to every foreign contractor engaged in implementing the project. Secondly, the guidelines does not stipulate any time-line for granting the approval to companies. The process of applying to the Ministry of Labor & Employment for approval is largely administrative and is susceptible to delays on various counts.

It is crucial that these issues are addressed at the earliest, which in turn are necessary to ease the growing concern among Indian companies regarding hiring of skilled professionals from abroad, which may be indispensable for running their industrial and/or business operations in India. Clarifications on the above issues would bring greater clarity for companies employing foreign expats in certain critical sectors.

Authored by: Sunaina Kapoor

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