US President Donald Trump’s significant increase in H-1B visa application fees is expected to negatively impact India’s services sector, hinder remittance inflows, and exert pressure on the Indian rupee, according to economists.
Recently, Trump mandated a $100,000 application fee for the H-1B visa program aimed at curbing its excessive use. India is particularly affected since approximately 70 percent of H-1B visa holders in the United States are Indian, many of whom work for Indian IT firms.
Indian migrants in developed countries are a crucial source of remittances for India, with the US contributing nearly 28 percent of these funds—estimated at about $35 billion annually, as noted by Citigroup Inc economists, including Samiran Chakraborty.
JP Morgan analyst Toshi Jain indicated that a decline in the number of H-1B visa holders from India could lead to a reduction in remittances to the country. In a worst-case scenario where no Indians apply for H-1B visas, annual remittances could drop by approximately $400 million.
This potential decline in remittances may add further pressure on the rupee, which has already underperformed among Asian currencies, slipping 0.1 percent to 88.20 per dollar in early trading on Monday.
Economists have also cautioned that these visa changes could disrupt India’s $280 billion IT services industry, which relies heavily on the H-1B program to send engineers to international clients. Shares of major outsourcing firms, including Tata Consultancy Services Ltd and Infosys Ltd, fell by over 3 percent on Monday as concerns emerged that the fee increase could complicate their operations.
The IT sector contributes over 7 percent to India’s GDP and employs nearly six million professionals worldwide, according to the National Association of Software and Service Companies based in Bengaluru.
The visa program changes also exacerbate tensions in India-U.S. relations, especially as New Delhi confronts the impact of new 50 percent tariffs imposed by the U.S. India’s Commerce and Industry Minister Piyush Goyal is visiting the U.S. this week to address these issues and advance trade negotiations.
According to Sonal Varma, an economist at Nomura Holdings Inc., Trump’s policies “increase medium-term growth risks” for the South Asian economy and compel the government to stimulate domestic demand.
While Trump aims to safeguard U.S. jobs by limiting immigrant inflows, experts suggest that the new regulations may inadvertently raise costs for American companies, potentially prompting them to expand their global capability centers in India. Major corporations, including Microsoft, Google, and Morgan Stanley, already operate sizable centers in India.
Citigroup posited that such expansions, alongside a possible reduction in Indian students studying abroad due to fewer viable options, may help mitigate economic impacts from diminishing remittance growth. The bank’s economists further estimate that a substantial portion of India’s remittance inflows originates from Indian nationals holding different visa types or residency status.
JP Morgan’s Jain suggested that while the immediate impact on the Balance of Payments is expected to be modest, the more significant concern is its implications for trade negotiations and potential future pressures on offshoring practices.
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Published on September 22, 2025.
