 "H-1B Visa")
On September 19, United States (US) President Donald Trump dropped yet another bombshell. He ordered that all new petitions for H-1B visas filed on behalf of workers outside the US would now carry a $100,000 fee. The measure, which will last a year unless renewed, is aimed at deterring firms from sponsoring foreign workers, particularly in entry-level roles. The immediate impact will be felt disproportionately by Indians, who form roughly three-quarters of all H-1B recipients.
Under the H-1B system, firms petition the government for the right to hire foreign workers in specialty occupations, often in technology or engineering. Outsourcing giants such as Infosys, Tata Consultancy Services (TCS), Wipro, and HCL, which have long relied on sending junior engineers to the US, are likely to be hit the hardest. By contrast, firms may still pay up for specialists in fields such as artificial intelligence (AI), chip design, biotechnology, and cybersecurity, where domestic talent is scarce and salaries high enough to justify the cost.
Students in the US on F-1 visas may be spared if they convert to H-1Bs without leaving — a strong incentive to remain in the country and push for permanent residency. Dependants too may find themselves constrained if the principal worker is affected. In short, the new fee reshapes mobility for a substantial slice of India’s professional diaspora.
All these months, Mr Trump’s trade negotiations have focused on merchandise exports, making export-oriented countries like China, Japan, South Korea, Taiwan, and Vietnam particularly vulnerable. To escape disaster, they quickly struck deals with Mr Trump, some promising impossibly large investment and jobs. India refused to either give in or make false promises to mollify Mr Trump, probably because it thought it had less to lose. But India is more vulnerable than others: Software exports and remittances from abroad, mainly the US, are lifesavers for the perennially weak Indian rupee. Without these two, economic growth will be hit noticeably. Mr Trump has gently twisted India’s arm with the new H-1B fee. He can do more harm, including the imposition of a remittance tax.
The White House argues that the H-1B programme is being abused. The order accuses American companies (without naming any) of laying off citizens while hiring foreigners at lower wages with specific details. Microsoft, Intel, Amazon, and Salesforce are the possible culprits, which have approved thousands of H-1Bs while cutting tens of thousands of domestic jobs. American firms plead for access to foreign talent even as they dismiss local workers, creating the perception of a programme skewed in favour of cost savings over skill.
Will it last? Hope it does
The market will suffer a knee-jerk reaction on Monday and tech stocks will possibly drift lower, but will this restriction last? And if it does, will it turn out to be positive for India after all?
First, there will be a pushback from within the US. With one stroke, Silicon Valley has lost its pipeline of talent. In 2023, around 65 per cent of H-1B visas were for “computer-related” roles — software engineers, systems analysts, etc. Top sponsors of H-1Bs are Amazon, Google, Microsoft, Meta, and Apple, along with large Indian firms operating in the US, like TCS. Startups, hospitals, research labs, and financial service firms too rely heavily on H-1B workers. The surcharge will raise costs, discourage new hires, and slow the taking on board talent for projects that require skills that are scarce. High-tech innovation may also slow down, if the pipeline from abroad dries up. Finally, litigation is likely; it is possible that US courts may strike down or amend the measure.
Paradoxically enough, if the restriction lasts, it may actually benefit India. Multinational firms are already investing in global capability centres (GCCs) in India to tap talent without the hassle of immigration. Currently, India hosts roughly 1,700 GCCs, employing 1.9 million people and generating $64.6 billion in export revenue last year. By 2030, some estimates suggest that India could host over 2,400 GCCs, employing close to three million people. Mr Trump’s fee may accelerate this trend. Firms that previously sent employees to the US may find it cheaper and simpler to expand offshore centres instead, keeping talent at home while retaining access to global projects.
The impact on India could go beyond numbers. With more skilled engineers, data scientists, and product managers remaining in the country, the local talent pool will deepen. Companies are likely to spread operations beyond Tier-I cities to places like Coimbatore, Kochi, Ahmedabad, Jaipur, and Bhubaneswar, tapping underutilised talent. Indian centres may increasingly take on higher-value tasks — research & development (R&D), design, and product management — rather than just coding or data entry. India’s role as a global talent hub will consolidate even further. In effect, Mr Trump may think he is hobbling India. In reality, he is nudging it towards a more robust, self-reliant and globally integrated model. The H-1B fee is both a thorn and a stimulus: Costly for American firms reliant on imported labour, inconvenient for Indian workers dreaming of Silicon Valley, but a potential boon for India’s domestic economy. The unintended consequences of Mr Trump’s protectionism may turn out to be more generous than its intent.
The writer is editor of www.moneylife.in and a trustee of the Moneylife Foundation; @Moneylifers
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
