Govt restores $25,000 floor pay for foreign IT employees

Govt restores $25,000 floor pay for foreign IT employees

New Delhi: The government revised its policy on the employment of overseas nationals for the third time in five months, reinstating a minimum salary, but only for those hired by information technology (IT) firms.

According to the clarification issued by the home ministry to all stakeholders, including the ministries of foreign affairs, labour and IT, the $25,000 (Rs11.55 lakh) minimum annual wage floor has been reinstated for those working in IT and IT-enabled services (ITeS).

“Foreigners can apply for jobs in the IT sector provided Indian firms pay each of them a minimum annual salary of $25,000," a senior home ministry official told Mint. “There is no salary cap for any other sector like power and steel. We would grant visa in other sectors as per the guidelines issued by the ministry of labour and employment."

The cap on foreign workers has been set at five for smaller organizations and 20 for bigger ones, the official said on condition of anonymity. The decision was taken last week after consultations with the various stakeholders, he added. Mint has reviewed the revised policy.

Indian missions abroad can grant employment visas to the extent of 1% of the total employed at the concerned Indian firm, up to a maximum of 20. If 1% works out to less than five, that will be the maximum number of overseas workers allowed. These rules only apply to the employment of overseas nationals locally by Indian companies and not to hires at their foreign locations.

“If the Indian firm wants to hire more than 20 foreign nationals, its request will be referred to the labour ministry in Delhi," said another home ministry official, adding that the 1% rule will not apply to the IT and ITeS sector. “The labour ministry will then check and verify whether such nature of expertise is available in the country and take a final call."

Applicants in sectors other than IT have to submit their academic certificates as well as a certificate from the Indian employer with the number of employees and the nature of the work performed by the firm. The certificate should also carry details about other foreign nationals it proposes to engage and the ratio of expatriates to total manpower.

The salary floor is a fair one, according to an industry executive. “Let us face it, in today’s context, Rs10-12 lakh (equivalent of $25,000) is reasonably fair for them to expect," said Pratik Kumar, corporate vice-president (human resources) at Wipro Ltd. “It is the same logic overseas governments follow as minimum threshold, there is a certain parity that is maintained."

The reinstatement of the floor for IT employees will help speed up their paperwork.

“The move to reinstall the floor of $25,000 is a welcome move for the IT industry as it will help in processing employment visas for highly skilled workers on a fast track," said Raju Bhatnagar, vice-president of Nasscom. “There are several instances where Indians firms have to import workers" as local workers’ specializing skills in some domains are not available.

Besides this, the large multinational centres and “captives need their global workforce to manage their Indian centres", he added.

India, which had initially imposed the $25,000 annual salary floor in April and May across all industries, had to withdraw it after feedback from its overseas missions, which said such a policy would severely restrict the flow of workers, especially from eastern Europe.

The government then abolished the minimum salary stipulation on 6 July. This led to confusion among employers and India’s missions aboard as the $25,000 cut-off began to be used as a benchmark to differentiate highly skilled workers from the semi-skilled and unskilled.

Meetings involving various ministries, industry representatives such as Nasscom and home ministry officials then followed.

“We then decided to revise the policy and issue a clarification," said the first official cited above. Mint had reported on 23 July that the government was preparing fresh guidelines.

While India will continue to give priority to hiring locally and not issuing visas for unskilled and semi-skilled work, the government is introducing another category known as project visas. The home ministry official said this would be to facilitate the “swift and timely" execution of projects in India.

“Under project visas, Indian firms can hire as many foreigners for the execution of projects (as they want)," he said. The visa will be valid until the project is completed.

“The visa won’t cover maintenance of the project afterwards and any other job related to it," he said. “However, the modalities of this are yet to be worked out." The official added that various stakeholders are deliberating the move and a decision is likely to be taken this month.

As of 31 December 2008, home ministry records show that 20,394 foreigners were registered as employees.

Surabhi Agarwal in New Delhi and K. Raghu in Bangalore contributed to this story.