Indian AI startups seeking to expand their footprint in the United States are facing increasing difficulties due to tightening US visa restrictions. These hurdles are impacting their ability to hire talent, meet with clients, and ultimately, innovate.

Visa Delays and Denials

Getting a B1/B2 business visa in India can now take between 3.5 to 9 months, causing significant delays for founders needing to travel to the US. O-1 visas, designed for individuals with extraordinary ability, are also becoming harder to obtain, with denial rates rising from 4.5% in FY23 to 5.8% in FY24. These increased visa processing times and denial rates are forcing startups to rethink their hiring and expansion strategies in the US.

The Impact of Stricter Rules

These stricter visa rules have several consequences for Indian AI startups. Firstly, they can slow down innovation at a time when global competition in the AI sector is intensifying. Secondly, they force companies to adjust their hiring strategies to navigate the complex visa landscape. Thirdly, Indians are now required to apply for US visas within India, eliminating the option of applying through third countries to expedite the process. This change makes it more challenging for founders to meet with clients and investors face-to-face.

H-1B Visa Challenges and Green Card Backlogs

Indian professionals on H-1B visas, who are crucial to the US AI ecosystem, face significant barriers due to US visa policies. A massive backlog in the EB2 category, including National Interest Waivers (NIW), forces them to wait potentially decades for a green card, despite their contributions to the economy and tax payments. While the EB1-A (high priority) visa could expedite the process, its stringent criteria often fail to account for the specific contributions within AI, limiting access for many specialists.

The uncertainty surrounding green card status can also deter Indian AI professionals from joining startups, as many prefer the stability of larger companies like FAANG. This reluctance hinders the development of new technologies and creates unfair competition for talent between startups and large corporations.

The US Losing its Edge?

If the US cannot offer clear pathways to permanent residency, it risks becoming a temporary training ground for talented Indian professionals who may then take their expertise to countries with more welcoming immigration policies, such as Canada, the UK, or the UAE.

New Restrictions on Third-Country Visa Applications

Adding to the challenges, the US Department of State has barred non-immigrant visa applicants, including students (F-1), visitors (B1/B2), and work visas (H-1B, O-1), from applying outside their country of citizenship or legal residence. This ends a pandemic-era practice that allowed Indian applicants to seek appointments in third countries to bypass backlogs at home. As a result, all Indian applicants must now apply through US consulates in India, where waiting times are already lengthy.

Mixed Reactions to Entrepreneur Rule Revision

The US government's decision to revise the International Entrepreneur Rule (IER), which allows foreign entrepreneurs to stay in the country for up to five years if their ventures benefit the public, has received mixed reactions. While some view it as an opportunity for Indian startup founders, others believe it may not yield significant results due to the lack of long-term security and the temporary nature of the program.

Despite the Hurdles

Despite these challenges, Indian immigrants continue to play a significant role in the US AI industry. More than half of the top privately-held AI companies in the US have at least one immigrant founder. This highlights the importance of foreign-born talent to the US's strength in STEM fields.