New Guidelines on requirement of employment visa for Foreign Nationals working in India on Projects

Indian diplomatic posts worldwide are no longer accepting employment visa applications from individuals who are not nationals of the country where the post is located. Instead, these applicants are advised to file their applications at the post in their country of citizenship. This change does not affect business visa applications. The government has issued new guidelines which prescribe stricter enforcement of business and work visa requirements for foreign nationals engaging in contractual or project work, including specific processes in relation to Chinese nationals.

The Indian government recently issued guidelines introducing new requirements governing where foreign nationals may submit employment visa applications. The guidelines also prescribe stricter enforcement of employment visa requirements for foreign nationals entering India for contractual or project work, and clarify the procedures for the adjudication and issuance of employment visas to Chinese nationals engaged in contractual or project activities.

Above clarifications were issued by The Government of India vide letter dated 20 August, 2009 through Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, clarifying visa requirements in respect of foreign personnel coming to India for executing project / contracts in India. A subsequent clarification has been issued by Ministry of Home Affairs (“MHA”) on 25 September, 2009. The key features of clarifications issued are as follow:

Foreign nationals working on projects / contracts in India require employment visas

• Foreign nationals coming to India for executing projects / contracts in India will henceforth have to come only on employment visas.
• All foreign nationals currently in India on business visas and engaged in project work or contract work, are now required to leave India upon expiry of their business visas or by 31 October, 2009, whichever is earlier. No Visa extension will be granted in such cases. Such foreign nationals are required to obtain EVs from their country of origin in order to continue working on projects / contracts in India.

• The Ministry of External Affairs (“MEA”) will advise the Indian Missions located in neighboring countries not to grant business visas to foreign nationals who come to India for execution of projects / contracts.

• All pending applications for grant of business visas for executing projects / contracts are to be returned to the applicants.

Issuance of business visas : Business visas are to be issued only to foreign businessmen who want to visit India for any bona fide business purpose, such as the following:

• To establish an industrial / business venture
• To explore possibilities to set up industrial business ventures in India
• To purchase / sell industrial products in India.

It has been reiterated by the MHA that the new clarifications apply only to foreign nationals who are on business visas but engaged in execution of projects / contracts in India. It has been clarified that business visas will continue to be issued to foreign nationals who visit India for bona fide business purposes such as mentioned above. In case of any doubt, the Foreigners Regional Registration Offices have been advised to refer the matter to Foreigners Division, MHA.

Issuance of employment visas

• Issue from Country of Origin: – Employment visas are to be issued only from the country of origin.
• Persons Eligible to employment Visa:– Employment visas are to be granted to skilled or qualified professionals, or to a person engaged or appointed by an Indian company / organization / industry / undertaking on contractual or employment basis at a senior level / as technical expert / in managerial position.
• Request only for the job for which Professional not available in India: – Employment visas requests for jobs for which a large number of qualified Indians are available should not be considered. Employment visas for clerical / routine / secretarial jobs will not be granted under any circumstances.
• Companies responsible for conduct of Professional in India:- The Indian company / organisation engaging such foreign nationals to be responsible for their conduct during their stay in India and also be responsible for their departure from India upon expiry of their employment Visa.

Issuance of employment visa to Chinese Nationals

Chinese nationals applying for employment visas are subject to an additional requirement called a security clearance. In the past, security clearance applications were referred by Indian diplomatic posts to the Ministry of Home Affairs (MHA) and were often delayed there indefinitely. Until the issuance of the guidelines, the clearance process was known only internally to the relevant government agencies.

The guidelines clarify the application process for security clearances. Individual applicants and their sponsoring entities are required to file the application with the relevant Indian diplomatic post and submit a copy to the MHA in New Delhi. The diplomatic post endorses the application to the MHA, who in turn forwards copies of the application to the Intelligence Bureau and the Ministry of Labour for review. Based on the recommendation of these agencies, the MHA conveys the approval or denial of the application to the diplomatic post. The clearance process is expected to take around 60 days or longer.

The guidelines also announced that the Indian government is monitoring Chinese nationals who may be on expired business visas and working on projects or contracts in India. Diplomatic posts are working with the Intelligence Bureau to compile information on business visas issued to Chinese nationals since January 1, 2008, including the visa holder’s name, sponsoring entity, visa validity period, and educational qualifications, among other details. Individuals and sponsoring companies found in violation will face penalties, which under current practice are discretionary and may take any of the following forms: negative publicity against the company, monetary fines, blacklisting of the company or individual, re-entry bars on the individual, or imprisonment.

New Process to issue employment visa to Chinese Nationals will be as follows:-

• Application / proforma to the Indian Mission in China by Indian / Chinese company for seeking security clearance for grant of employment visa to be submitted after incorporating the following additional information:

? Educational qualification and the present job

? Nature of job proposed to be performed in India

• A copy of the employment visa application / proforma is also required to be forwarded to the Foreigners Division, MHA

• Clearance / Rejection of Visas applied for, to be furnished by the Foreigners Division, MHA, within 60 days from the date of receipt of the application

• Upon receipt of the applications in the prescribed format, the MHA is to forward the same to the following two departments:

? The Intelligence Bureau (IB)

? Ministry of Labour (MoL)

• The IB to give its clearance / rejection of the applications to the Ministry of Home Affairs within 15 days from their receipt of the proposal, and the Ministry of Labour to give its clearance / rejection of the applications within 45 days.

• The MEA will also compile details of all BVs issued to Chinese nationals in the past for execution of projects / contracts in India with effect form 1 January, 2008. This information will be forwarded to IB for verification on whether such personnel are overstaying in India beyond the validity of their BVs.

Issue: – The procedure for obtaining EVs in the Indian Missions in the home countries of foreign nationals may prove to be challenging in practice for assignees and employers. Additionally, consistent practice and procedures need to be developed and implemented at the Missions located in different countries.

Conclusion:-The clarifications issued by the Government will have significant implications for inbound short term assignments into India. Assignees coming to India from overseas countries on short term visits, even for stewardship functions, may require employment visa. Further, issue of visa – business and employment may be subject to greater scrutiny. The change in the status of visa would definitely have tax and social security implications for the assignees and employers during their stay in India. Additionally, corporate tax ramifications may also trigger.