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Entrepreneurship in the US could soon become a lot harder for immigrants

Spandan Sharma
29th May 2018
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Setting up shop and staying in the US as an entrepreneur could soon become a lot harder, as the US Department of Homeland Security (DHS) has proposed a new rule intended to scrap the International Entrepreneur Rule (IER). Under the IER, immigrants creating new companies (and jobs) in the US could remain in the country for 2.5 to 5 years, as long they met certain milestones for growth and development. However, the current Trump administration wants to rescind the rule under a broader crackdown on immigration to “secure American jobs” and “protect American businesses”.

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The United States of America has long been billed as a land of opportunity and potential, where enterprising minds can become successful on the dint of their hard work, vision, and entrepreneurial grit. This, in turn, has attracted some of the top entrepreneurs from around the world who, despite being immigrants, take pride in migrating to the US to make their dreams come true, boosting the US economy along the way. A 2016 study by the National Foundation for American Policy discovered that “immigrants have started more than half (44 of 87) of America’s startup companies valued at $1 billion dollars or more and are key members of management or product development teams in over 70 percent (62 of 87) of these companies”.

Clearly, immigrants have played a big role in the development of the US startup ecosystem and economy. Recognising this, the Obama administration created the IER in 2017 through an Executive Order, an initiative aimed at attracting more immigrant entrepreneurs to the US to compete with other countries around the world doing the same. However, the IER ran into problems barely a week before it was due to be implemented in July 2017, with the DHS asking for the rule’s implementation to be delayed and signalling its intention to scrap the IER.

The DHS’s delay was challenged by the National Venture Capital Association (NVCA) – the premier trade association representing the US VC industry – and other plaintiffs in court, and a judge ruled in favour of them in December, ordering the DHS to lift its delay and begin implementing the rule. However, according to the NVCA, there is no evidence that the DHS ever complied with the ruling. Legal proceedings over the fate of the IER are still underway, even as the DHS has invited public comments on the proposal to abolish the rule.

In a statement about the new DHS proposal, Bobby Franklin, President and CEO of the NVCA, said, “The startup and venture community is very disappointed with DHS’s short-sighted decision to turn away American jobs that would be created by the International Entrepreneur Rule...The facts are clear: our country needs more entrepreneurship, which is exactly what the International Entrepreneur Rule would bring. We will continue to explain to the administration why immigrant entrepreneurship benefits our country and must be supported by policymakers.”

The IER’s abolition, of course, means that travelling to the US to set up their company will become that much harder for hundreds of Indians who aspire to break into the booming startup ecosystem of the US. This latest setback comes even as Indians are facing increasing difficulties in immigration to the US, with much tighter scrutiny and harsher regulations for the popular H1-B visas as well as dependent visas. Indian-American Congressman Raja Krishnamoorthi from Illinois told PTI in April this year, “One issue that certainly came up and is something that we all have to be mindful of is there’s a sense in India that America is no longer immigrant- friendly.”

As more and more Indian entrepreneurs nurse global ambitions that are often tied to setting up shop in the US, provisions like the IER are key to helping these ambitions along. Scrapping them is likely to hurt the US economy in the long run as the country’s large immigrant workforce takes their business – and jobs – elsewhere. However, the DHS has stressed that entrepreneurs looking to start businesses and work in the US have alternate routes available. Speaking about the proposal, a spokesperson for the U.S. Citizenship and Immigration Services (USCIS) commented, “The IE Final Rule has been referred to as creating an ‘entrepreneur visa’ or ‘startup visa’, which is inaccurate. Rather, the IE Final Rule establishes a process for certain entrepreneurs to seek parole into the United States. Only Congress can create a new visa program, and it has not done so. While DHS is proposing to remove regulations published as part of the final rule titled, ‘International Entrepreneur Rule’, the Department still has the statutory authority to use its discretion to grant parole on a case-by-case basis for urgent humanitarian reasons or significant public benefit.

“The Immigration and Nationality Act (INA) already provides for visa classifications that enable certain entrepreneurs to start businesses and work in the United States, such as the E-2 nonimmigrant classification and the EB-5 immigrant classification.”

Members of the public can submit their written comments on the DHS’s proposal on or before June 28, 2018.

UPDATE: The story has been updated to reflect comments from a USCIS spokesperson.

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