US IT salvo opens new front for India

Why in the News

The United States (US) has suspended major Indian information technology (IT) firms from the Program Electronic Review Management (PERM) programme, a pathway to permanent residency. The move follows last year’s $100,000 fee on H-1B visas and opens a labour mobility front alongside US pressure on India’s Russian energy purchases and the stalled trade deal.

What is PERM, and why does the suspension matter?

1. What PERM is: A US labour certification an employer must secure before sponsoring a foreign worker for permanent residency (the green card), like a hiring clearance for a permanent recruit.
2. Wider agenda: The suspension is part of a larger US drive to crack down on foreign labour and curtail immigration, after the H-1B fee unsettled firms relying on skilled foreign workers.
3. PERM volume: The programme received 1,17,849 applications in the US fiscal year that ended in September 2025.
4. Small direct exposure: Indian IT firms filed less than 2% of them, an ICICI Securities report shows. The immediate impact is muted, but the move will sour sentiment.
5. The takeaway: The direct cost is small, but the signal is that US curbs on Indian skilled workers are widening.

What is at stake for India’s services exports?

1. Broader visa risk: The same report warns that “any extension into broader work-visa restrictions would pose a more material risk”.
2. Export earnings: India’s software, business and other services exports, a major source of foreign exchange, stood at $221 billion in 2025-26.
3. Bilateral strain: The suspension adds labour mobility to an India US relationship already strained over energy and trade.

How does the move fit a wider pattern of US pressure?

1. Energy tariff law: Weeks earlier, the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 allowed US tariffs of up to 100% on top buyers of Russian energy, such as China and India.
2. Russian crude buyers: Since December 2022, China has taken roughly half of Russia’s crude exports and India 37%, per the Centre for Research on Energy and Clean Air (CREA).
3. Diesel deal: The US President has prodded India to cut Russian oil purchases, yet announced a deal days ago for Russia to supply diesel to US and global markets.
4. Stalled trade deal: The US Trade Representative said a trade agreement was not “imminent”. India’s Finance Minister said both sides have “reached a plateau”, beyond which giving or taking is very difficult.

Challenges

1. Visa dependence: Indian IT relies on sending professionals to US client sites, so each immigration curb raises costs and delays.
2. No totalisation pact: Indian workers in the US pay social security they often cannot claim, with no agreement to count contributions across both countries.
3. Strategic autonomy test: India’s ties with Moscow clash with US expectations of a strategic partner.
4. Linked pressure: Washington ties energy, trade and labour issues together, so a concession on one front does not settle the others.

Way Forward

1. Totalisation agreement: Conclude a social security agreement so mobile Indian IT workers recover their contributions.
2. Tariff waiver: Seek a waiver under the new US sanctions law, which lets the US President exempt a country.
3. Market diversification: Use India’s trade agreements with the United Kingdom and the European Free Trade Association to widen services markets.
4. Local hiring: Indian IT firms should raise local hiring in the US to cut dependence on work visas.

Conclusion

The PERM suspension costs little directly, but it confirms that Washington is now pressing India on labour mobility, energy and trade at once. Whether work visa curbs widen, and whether trade talks move past their plateau, will decide how far the pressure reaches India’s services exports.

Back2Basics: H-1B visa

1. What it is: A temporary US work visa that lets employers hire foreign workers in specialty occupations needing at least a bachelor’s degree.
2. Annual cap: Visas are subject to a yearly numerical cap, allocated by lottery when applications exceed it.
3. Indian share: Indian nationals have historically received the largest share of H-1B visas issued each year.
4. Earlier coverage: “US moves to codify over $100,000 H-1B visa fee via formal regulation” (25 August 2026) covered the fee’s legal basis.

Matching Previous Year Question

“[2026] The Chancellor of Germany visited India in January 2026. Which of the following is/are NOT correct in terms of outcomes? 1. MoU between All India Institute of Ayurveda and University of Hamburg 2. MoU on Youth Hockey Development between Hockey India and German Hockey Federation 3. Establishment of a bilateral dialogue mechanism on the Indo-Pacific 4. Opening of an Honorary Consul of Germany in Lucknow (a) 2 and 3 (b) 1 and 4 (c) 3 and 4 (d) 1 only ANSWER: B”