US President Donald Trump’s latest directive on H-1B visas is impacting service exports from India, as his administration seeks to curb immigration into the country. The recent increase in H-1B visa fees by the US government, from approximately $1.5-4,000 to $100,000 per year, applies only to new visa applications and has no impact on existing visa holders or renewals.
However, analysts warn that if this move continues, it could disrupt Indian IT exports, put pressure on project margins, challenge traditional delivery models, and complicate on-site project execution.
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Elaborating on the broader context, Vikas Gupta, CEO and Chief Investment Strategist at Omniscience Capital, said, “Indians hold approximately 70 percent of H-1B visas in the US. The timing of this order, just days before crucial discussions on the India-US trade deal, suggests it’s more of a negotiating tactic than a strategic immigration reform.”
He further added that the rapid changes in the statement within hours of the announcement further reinforce the notion that this is a tactical move rather than a deliberate policy move.
Meanwhile, Sandeep Pandey, co-founder of Basav Capital, said the US administration’s H-1B visa fee hike could be called Trump’s Tariff 2.0.
After imposing taxes on the industries of its trading partners, the White House is also considering the service industries of its trading partners, and this isn’t limited to India alone. He further added that this will be imposed on all of its trading partners, including China and the European Union.
He further added, “The primary reason for this move is to raise funds, as bond yields in the US have suddenly risen from 3% to over 5%. Since the US Treasury is government-backed, the US government faces the challenge of repaying soon-to-be-maturing bonds.”
Indian IT Sector Outlook
Indian IT and software gross and net exports are projected to be $181 billion and $160 billion, respectively, in FY2025. Emkay Global projects net IT services export growth of 5 percent for FY2026 and a 7 percent compound annual growth rate (CAGR) over the next five years.
If H-1B visa-related risks persist, and the growth of Global Capability Centers (GCCs), which currently account for over $65 billion in gross exports, continues, these growth rates could fall below 4 percent.
However, Emkay maintained its FY26 forecast, expecting the current account deficit to GDP ratio to remain at 1.2 percent and net remittances to remain at around $120 billion, similar to FY25. It also cautioned investors against potential downside risks from future policy updates.
The near-term impact on the revenue and margins of large IT companies is considered limited, as their H-1B dependence on US operations continues to decline by 20-50 percent. The brokerage stated that these companies are increasingly relying on local hiring, US delivery centers, automation, and subcontracting models.
Conversely, the brokerage further stated that medium and small IT companies, which still rely heavily on the traditional “body-shopping” export model, may face more severe challenges as large companies shift to local hiring and operational strategies.
Decline in the Indian IT Sector
The Indian IT sector reacted sharply to this development. The Nifty IT index fell more than 3.5 percent in intraday trading on Monday, significantly outperforming the benchmark Nifty, which fell only 0.5 percent. All components of the Nifty IT index were in the red.
Tech Mahindra was the biggest loser, falling 5.8 percent, followed by Mphasis and Persistent Systems, each falling more than 5 percent. Major IT stocks like TCS, Wipro, Infosys, and HCL Technologies fell up to 5 percent.
(With agency inputs)