US Suspends 8 Firms from PERM: MEA Reacts...

CURRENT AFFAIRS | 10 OCTOBER 2026

On Thursday, 8 October 2026, the United States Department of Labor suspended eight companies from its Permanent Labor Certification (PERM) programme. Labor Secretary Keith Sonderling named six large IT services firms, Cognizant, Infosys, Tata Consultancy Services (TCS), Wipro, HCL and Capgemini, and said that Microsoft and Adobe were also being suspended. According to Business Standard, the department said it would not accept new applications and would not process pending permanent labour certification applications involving these companies. CNBC reported that Microsoft and Adobe were suspended “due to multiple active federal investigations”.

The very next day, Friday, 9 October 2026, India’s Ministry of External Affairs (MEA) responded with a statement. It said that the steps announced by the US “do not advance the shared ambitions of both countries”. Just as importantly, the MEA clarified a point that had worried many Indian professionals: PERM is distinct from the H-1B visa programme, and the suspension “does not, by itself, affect the validity of existing H-1B visas or the status of H-1B visa holders and their dependents”. The ministry added that there could be some impact on the permanent-residency (Green Card) process of eligible employees of the affected companies.

For a CLAT aspirant, this story is a compact lesson in three things at once: how US immigration law is layered, how India conducts economic diplomacy, and how a reading passage can test the difference between a temporary right and a permanent one.

Want structured CLAT preparation? Try our free 5-day Bodh Demo Course with live classes and expert guidance. Start Free →

What exactly was suspended?

The suspension is about PERM, not about visas as such. PERM is the labour-certification step that most employers must complete before they can sponsor a foreign worker for an employment-based Green Card, that is, permanent residence in the US. Without a certified PERM application, an employer generally cannot move on to the next stage of the Green Card process for that worker.

Explaining the move, Secretary Sonderling said that since 2009 these companies had received over 230,000 H-1B approvals and over 100,000 permanent labor certifications, as reported by CNBC. The US administration presented the step as a response to alleged misuse of foreign-worker programmes. Microsoft, for its part, defended its hiring practices in a statement quoted by CNBC, saying that the vast majority of its US employees are Americans. These are claims and counter-claims; the formal action itself is the suspension from PERM.

Background & Framework

PERM (Permanent Labor Certification) is administered by the US Department of Labor. In outline, the employer must:

obtain a prevailing wage determination, so that the foreign worker is not paid less than the going rate for that job;
run a recruitment test showing that no qualified, willing and available US worker could be found for the position;
file the labour certification application on Form ETA-9089.

Once PERM is certified, the employer files an immigrant petition (Form I-140) with US Citizenship and Immigration Services (USCIS). Only after that does the worker move towards the Green Card itself, usually in the EB-2 or EB-3 employment-based categories.

H-1B, by contrast, is a temporary, non-immigrant work visa for specialty occupations. It allows a person to work in the US for a period; it does not by itself confer permanent residence.

A further layer explains why Indians are hit hardest by any slowdown in the Green Card pipeline: under the US Immigration and Nationality Act, no single country may receive more than 7% of employment-based Green Cards in a year. Because Indian applicants are so numerous, this per-country limit produces the longest queue for Indian nationals.

India’s response: calibrated, not confrontational

The MEA statement is worth reading closely because of its tone. It did not threaten retaliation. Instead, it made three moves:

Clarification: PERM and H-1B are separate; existing H-1B visas and the status of holders and their dependents are not, by themselves, affected.
Argument from mutual benefit: “Talent mobility adds value to both economies”, creating opportunities for Indian professionals and helping US companies access skilled talent, drive innovation and create jobs. The ministry called this an area of “tremendous mutual benefit”.
Measured disapproval: the steps “do not advance the shared ambitions of both countries”. The MEA said it would continue to follow developments.

This is classic economic diplomacy. India frames the movement of skilled professionals not as a favour asked of the US but as a two-way gain, and keeps the door open for dialogue. The clarification also has a domestic purpose: it calms anxiety among families of Indian professionals who might otherwise have assumed that their visas were in danger.

Why it matters for India

Indian IT services firms and Indian engineers have for decades been among the most significant users of US skilled-worker routes. A pause on PERM does not stop anyone from working in the US today, but it can freeze the path to permanent residence for employees whose Green Card applications run through the suspended companies. For workers already waiting in the long India queue, any additional delay matters.

For the companies, the immediate effect falls on the Green Card sponsorship pipeline. Six of the eight named firms are large IT services companies, and four of them (Infosys, TCS, Wipro and HCL) are Indian IT majors, which is why the story drew strong attention here. The inclusion of two US technology majors, Microsoft and Adobe, also shows that the action was not confined to outsourcing firms.

Analysis: sovereignty, reciprocity and the rule of law

Every state has a recognised sovereign power to decide who may enter and settle on its territory. That is why India’s response was diplomatic rather than legal: there is no international forum where India could simply “overturn” a US labour-certification decision. At the multilateral level, the closest concept is Mode 4 of the WTO’s General Agreement on Trade in Services (GATS), the temporary movement of natural persons to supply services. India has long pressed for freer Mode 4 movement, but Mode 4 concerns temporary service supply, not permanent immigration, which is exactly the line the MEA itself drew between H-1B and PERM.

Within the US system, the action raises familiar administrative-law questions: on what basis an executive department suspends participation in a statutory programme, and how affected employers and workers can seek review. Those questions will be answered in the US, not in India, but they mirror themes that CLAT legal passages often explore, such as proportionality, reasoned decision-making and the effect of an administrative order on third parties who were not themselves accused of anything.

The CLAT Angle

GK questions can test: which US department runs PERM (the Department of Labor); what PERM stands for; the number of companies suspended (eight); and the core MEA line that PERM is distinct from H-1B.

Legal reasoning passages can use the case to test the difference between a temporary permission (H-1B) and a step towards a permanent status (PERM, then Green Card). A typical question: “If a worker holds a valid H-1B visa and his employer is suspended from PERM, is his current work authorisation automatically cancelled?” The principle in the passage would point to no, while his Green Card application may be delayed.

Critical reasoning items might ask which statement weakens the claim that the suspension protects domestic workers, or which assumption underlies the MEA’s “mutual benefit” argument.

Reading the story carefully

Two traps are worth avoiding. First, the PERM suspension does not mean that H-1B visas have been cancelled; the MEA said so in terms. Second, the figures quoted by the US side, such as H-1B approvals since 2009, are the US administration’s own numbers, given to justify the decision. A careful reader attributes them rather than treating them as settled findings, exactly as a CLAT passage expects you to separate a speaker’s claim from an established fact.

Key Facts

Date of US action: Thursday, 8 October 2026.
Authority: US Department of Labor; announced by Labor Secretary Keith Sonderling.
Companies suspended (8): Cognizant, Infosys, TCS, Wipro, HCL, Capgemini, Microsoft, Adobe.
Effect: no new PERM applications accepted; pending ones not processed for these companies.
Microsoft and Adobe: suspended citing “multiple active federal investigations” (CNBC).
US figures since 2009: over 230,000 H-1B approvals and over 100,000 PERM certifications for these firms.
MEA statement: Friday, 9 October 2026; steps “do not advance the shared ambitions of both countries”.
MEA clarification: PERM is distinct from H-1B; existing H-1B visas and holders’ status not affected by itself.
PERM sequence: prevailing wage → recruitment test → ETA-9089 → I-140 with USCIS → Green Card.
Per-country limit: no country gets more than 7% of employment-based Green Cards a year.
GATS Mode 4: temporary movement of natural persons to supply services.

Memory Hook / Mnemonic

“PERM is the Permanent door, H-1B is the Hall pass”: PERM leads towards permanent residence; H-1B only lets you stay and work for a while. Closing the door does not tear up the hall pass.

For the eight names, remember “C-I-T-W-H-C + M-A”: Cognizant, Infosys, TCS, Wipro, HCL, Capgemini, plus Microsoft and Adobe. And the steps: “Wage, Search, 9089, I-140”.