The proposed law will hurt the over $100 billion IT-ITES industry in India and software firms as their cost of operations could go up significantly.
The finance minister is in Washington and raised the issue of Comprehensive Immigration Reform Bill with the US Congress members.
US Federal lawmakers are grappling with the bill on visa and immigration. The Senate Immigration Bill imposes stiff visa restrictions on knowledge workers or IT companies as we know. He said these restrictions amount to non-tariff barriers.
The bill would make it harder for Indian IT professionals to get temporary work visas.
During his key note address at the 38th annual Leadership Summit of the US India Business Council (USIBC) on Thursday attended by executives, officials and lawmakers from both India and the US, Chidambaram expressed concern over provisions of the immigration legislation.
Chidambaram said there is a need to find a way to "disentangle" it.
"In no dictionary is immigration defined as including temporary relocation of knowledge workers. Yet the immigration bill has a clause that seems to erect non-tariff barriers on temporary relocation of knowledge workers," he said.
"I have spoken to officials, Senators and Congressmen (on our concerns on immigration bill). They understated that."
"The restrictions sought to be placed on knowledge workers amount to non-tariff barriers".
The Bill, which was recently passed by the US Senate, and is before the House of Representatives, proposes several changes including higher visa costs and increase in wages for H-1B visa holders.
If passed by the House of Representatives (the House is proposing diluted visa rules) , the Bill will be sent to President Barack Obama for signing it into law.
(With agencies inputs)