In what could be seen as a setback to Indian IT professionals, the US Senate has voted for imposing strict conditions on hiring of people with H-1B visas by American companies receiving federal bailout money.

The amendment to the pending stimulus bill restricting the hiring of foreign workers, passed by the Senate through a voice vote on Friday, was a watered-down version of what was introduced earlier.

The original amendment had called for a blanket ban on H-1B hiring by companies that would have received money under the Troubled Assets Relief Programme. The amendment approved by the Senate was co-sponsored by Republican Senator from Iowa, Chuck Grassley, and independent Senator from Vermont, Bernie Sanders.

The modified amendment requires that a company receiving TARP funds and applying for workers under the H-1B process must operate as an "H-1B dependent company."

This means, explained Grassley in a statement, that the companies will still be able to hire H-1B visa holders, but must comply with the H-1B dependent employer rules which include attesting to actively recruiting American workers; not displacing American workers with H-1B visa holders; and not replacing laid off American workers with foreign workers.

"Hiring American workers for limited available jobs should be a top priority for businesses taking taxpayer money through the TARP bailout programme," Grassley said.

With the unemployment rate at 7.6 per cent, there is no need for companies to hire foreign guest workers through the H1-B programme when there are plenty of qualified Americans looking for jobs, he argued.

Even as he supports the H-1B programme, which has mostly benefited Indian techies, Grassley said there is an urgent need for a reform in it. The programme should be used in the way it was intended as a temporary measure to supplement a company's need for hi-tech or specialised workers when none are available in the US, he said.

In another statement, Sanders said the amendment would require bailed-out banks, where there have been layoffs, to hire only Americans for two years.

"The very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labour from overseas while they are laying off American workers," Sanders said. "Wall Street caused the crisis, millions of people lost jobs, including 100,000 in financial institutions. Now they want to bring in foreign workers," Sanders said, adding: "Talk about adding insult to injury."