Indian Startups Feel US Gold Card Unviable

Startups are able to manage investment amount of around $1 mn under the EB-5 scheme, but $5 mn upfront payment to the government will negatively impact their ability to set up business in the US. -- Pareekh Jain, Founder of Pareekh Consulting, tells Bizz Buzz

Bengaluru: ‘Gold Card’ visa scheme proposed by the Trump administration, replacing the current EB-5 immigrant investor visa programme, may spell trouble for Indian startups in establishing their businesses in the US.

According to industry analysts, the proposed ‘Gold Card’ visa programme, if passed, will mandate a payment of $5 million from investors, which is a steep rise over the payout that the investors have to commit under the EB-5 programme.

“Startups are likely to be adversely affected if EB-5 programme gets replaced by Gold Card visa. Because, startups are able to manage investment amount of around $1 million under the EB-5 scheme, but $5 million upfront payment to the government will negatively impact their ability to set up business in the US. So, startups in the technology domain, which always seek to have presence in the US, are likely to see huge increase in their spends,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting, told Bizz Buzz.

He, however, said that this new card would not impact the temporary work visa permits like H1B and L-1 in the near-term.

Recently, the US President Donald Trump announced that the US government will float a new visa programme- ‘Gold Card’, replacing the existing EB-5 programme.

“We are going to be selling a Gold Card. We are going to be putting a price on that card of about $5 million. It’s going to give you Green Card privileges, plus it’s going to be a route to (American) citizenship, and wealthy people would be coming into our country by buying this card,” Trump has said.

The scheme, the details of which are yet to be out, would replace the EB-5 immigrant investor visa programme, Trump added. According to reports, details of the scheme would be out in two weeks and there is a likelihood that the Gold Card will not require an investment in American businesses or the creation of new employment. It could simply be a direct purchase of a Green Card by paying a flat fee of $5 million to the US government, reports suggested.

Notably, the EB-5 programme, which was created by Congress in 1990 and administered by the US Citizenship and Immigration Services (USCIS), grants permanent residency (Green Card) to foreigners who invest in American businesses. According to extant rules, investors must put in at least $1.05 million ($800K in some cases), and create at least 10 jobs for Americans.

Analysts are of the opinion that such new scheme may affect the current focus of the US on granting the best mind citizenship. If passed, the new scheme may dilute the US policy of attracting new talent to the country. “Now, the whole narrative is that the US wants more rich people to come to their country than people with talent becoming rich after coming to the US,” said an industry source.

As the Trump administration is intensely focussed on reducing the fiscal deficit of American economy, new Gold Card scheme can bring substantial amount of capital to its economy. The US government doesn’t receive any money upfront from the ongoing EB-5 programme, while the proposed scheme will change that approach by direct payment to the US government.