Impact of America Competes Act of 2022 on the Indian Start-up sector

In the recent past, the United States has proposed new legislations and amendments to its existing legislations, with specific target on critical technology (including semiconductors) to ease and expedite the entry of global technology, talent and start-up owners in the US, to reduce its dependency on China and promote growth and innovation within the US economy.

One of the new legislations proposed, is the America Competes Act of 2022 (“Act”). The Act proposes amendments to several existing legislations including the following amendments to the Immigration and Nationality Act, 1965:

Three new distinct classes of Class “W” visa:

• The first category is the “W-1” class visa, wherein certain eligible foreign nationals who have ownership interest in start-ups, can apply for a US visa under this category;
• The second category, the “W-2” class visa is for foreign nationals, employed by start-ups, who are critical for operations of start-ups in staff roles, in the US; and
• The third category, the “W-3” class visa is for the spouse and/or children of such foreign nationals who has received a “W-1” or “W-2” visa, as above.

For an individual to qualify to be eligible to apply for a “W-1” visa, as above, the said foreign national shall provide a track record for job creation or successful funding or revenue generation, in addition to the following:

• Must have at least a 10% stake in a start-up within the US, in the last 18 months from the date of the application; and
• The said start-up must have received $250,000/- in qualified investments from a US citizen or PE/VC fund or organisation, in the last 18 months from the date of the application;

Or;

• if the said foreign national has received $100,000 in government funding, awards or grants in the previous 1.5 years

While the initial “W” class visa will be granted for a period of 3 years, the Act allows the “W-1” class visa holders to extend the said visa further for upto 8 years, if certain growth metrics are met and qualified.

Lastly, individuals who have secured a doctoral degree in science, technology, engineering or mathematics (STEM) subject from a qualified US research institution or a foreign institution (US recognised), any and all caps on such H1-B visa holders have been removed.