H-1B Visa Fee Hike to Cost Indian IT Sector $250 Million

The recent decision by the United States President to impose a $100,000 application fee for H-1B visas has significant implications for the Indian IT industry. This move is expected to disrupt the operations of Indian tech companies in the United States, as many rely on the H-1B visa program to send engineers to client offices. The Indian IT services sector, valued at $280 billion, is already facing challenges due to reduced technology spending by clients, exacerbated by geopolitical tensions and tariff policies. The additional financial burden of the new visa fee could further strain an industry already struggling with stagnant growth.

The timing of this policy change is particularly sensitive, as it comes just before an Indian delegation is set to visit Washington to seek breakthroughs in trade negotiations. The new visa rules also intensify the global anti-immigration sentiment, with India being at the center of the impact. This move is seen as a geopolitical power play, sending a clear message that the U.S. is not welcoming foreign students and workers and is imposing rules unilaterally without consistency.

The H-1B visa program is extensively used by Indian outsourcing companies and U.S. tech firms to bring in foreign technical talent. Financial and consulting companies also utilize this program to secure tens of thousands of visa slots through a lottery system. The Trump administration views this adjustment as part of a broader plan to strengthen legal applications while curbing abuses. The current application process involves employers submitting applications by March, with a lottery conducted in April. There are 65,000 visa slots available, with an additional 20,000 reserved for U.S. master's degree holders. In 2025, the number of applications is expected to exceed 470,000. Many companies submit multiple applications for the same batch of employees to increase their chances of selection.

The new $100,000 visa fee will be an additional cost on top of the current fees, which are relatively low. Current fees related to H-1B visa applications include a $215 lottery registration fee and various application fees. As of the 2023 fiscal year, 72.3% of all H-1B beneficiaries were born in India, including both initial and continuing employment. Infosys Ltd., for instance, received 2,504 initial employment approvals for H-1B visas in the 2024 fiscal year. Under the new regulations, this would cost at least $250 million.

The Indian government has been quick to respond, with the commerce and industry minister stating that immigration rules, including H-1B visas, were not discussed during U.S.-India trade talks. Opposition leaders have criticized the government for failing to protect Indian interests in the face of the U.S. administration's decision to increase H-1B visa fees. The Indian Prime Minister, in a national television address, discussed reducing consumption taxes but did not mention the U.S. visa policy changes. The Indian Ministry of External Affairs has indicated that consultations between the Indian tech industry and the U.S. are expected to determine future directions.