Donald Trump’s sticker shock on H-1B visas risks disrupting Indian tech firms’ US projects, and is forcing Prime Minister Narendra Modi to once again deal with the fallout from America First policies.
The US president’s order on Friday — which requires a $100,000 fee for H-1B applications — will hurt margins of Indian outsourcers who use the program to deploy engineers to client sites. That’s a blow to India’s $280 billion IT services sector that’s already grappling with sluggish growth as customers cut back on technology spending due to geopolitical tensions and Trump’s tariffs.
The changes to the visa policy deepen an already strained India-US relationship and come on the eve of the Indian team’s visit to Washington as they seek to make a breakthrough on trade talks. They also add to a wave of anti-immigration movements across the globe that have impacted the world’s most populous nation.
Trump’s move is “geopolitical turf war,” said Chander Prakash Gurnani, the former chief executive officer of Tech Mahindra Ltd. and who now runs an AI firm. “The messaging is — foreign students are not welcome, foreign workers are not welcome, we will impose whatever rules we want and we will not be consistent with them.”
The H-1B visa program is used heavily by the Indian outsourcing firms as well as the US tech sector to bring in skilled workers from abroad. Finance companies and consulting firms also use the program that makes tens of thousands of visas available via a lottery. The Trump administration cast the changes as part of a broader plan to bolster legitimate applications while weeding out abuses.
H-1B visas are awarded based on a system where employers file petitions by March for a lottery in April, with 65,000 visas available plus 20,000 for US master’s graduates. In 2025, over 470,000 applications were submitted. Many firms submit multiple registrations for the same workers to improve their odds at the lottery, a Bloomberg News investigation previously found.
The new $100,000 payment would be in addition to current fees, which are more modest. Fees directly tied to the H-1B visa application currently include a $215 fee to register for the lottery alongside various filing fees.
Indian-born workers accounted for 72.3% of all H-1B beneficiaries in the US fiscal year to September 2023, which includes initial and continuing employment. Infosys Ltd. got approval for initial employment of 2,504 H-1B visas in FY2024. Under the new rules, that would cost at least $250 million.
As recent as July, Indian Commerce and Industry Minister Piyush Goyal had said immigration rules — including those around H-1B visas — had not come up in US trade talks. Opposition lawmakers were quick to blame Modi for Trump’s decision on the H-1B fee hike, saying the government has failed once again to protect Indian interests.
In a televised address to the nation Sunday, Modi spoke about a reduction in consumption taxes, but didn’t make mention of the visa changes. India’s foreign ministry on Saturday said the local tech industry and the US are expected to consult on the path forward.
While Trump aims to protect US jobs by restricting immigrant inflows, the new rules could backfire: they will likely raise costs for American corporations and push them to step up the expansion of their so-called global capability centers in India. Companies including Microsoft Corp., Google, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley already run large GCCs in India.
“If American companies cannot outsource onshore, they may look to expand their offshore presence in places like India, even with a possible fee hit,” said Bhaskar Rao, chief executive officer of communications company Digital Sea. “The decision is clearly targeted to keep Trump voters happy, but it remains to be seen whether they can replace nearly 65,000–85,000 junior and mid-level professionals affected by the H-1B cap.”
The order, which took effect Sunday, is already drawing criticism for flouting clear requirements of US federal immigration law and is likely to invite immediate lawsuits. The lack of clarity around the new rules prompted Microsoft, Amazon.com Inc. and Alphabet Inc. — some of the biggest beneficiaries of the H-1B program — to initially warn employees against foreign travel.
“The main issue with such decisions is that they create a lot of uncertainty in the business environment,” said Arup Raha, a Singapore-based independent economist. “Such a supply-side shock” isn’t in US interests either, he said.
Indian firms such as Tata Consultancy Services Ltd., Infosys and HCL Tech Ltd. have steadily pared back their dependence on H-1B visas since Trump threatened to raise immigration barriers in his first term and a bulk of projects were done remotely at the height of coronavirus pandemic. All major IT companies have also stepped up local hiring and ramped up so-called delivery centers in the US to service clients.
Still, the H-1B remains critical to Indian IT firms — it helps maintain key client relationships in their biggest market, and allows engineers to be stationed on the ground for sensitive projects in the US. The increased visa costs will force them to fly even fewer workers to client sites. Infosys employs thousands of people across its delivery centers in states including Texas, Indiana, and North Carolina.
“The move will almost certainly be challenged in court, and there will be considerable pressure from the tech industry to reverse it,” Digital Sea’s Rao said. “Nothing is final with Trump.”
—With assistance from Shruti Srivastava and Newley Purnell.
