Trump’s “new H-1B policy” is another “precise strike” against India.
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The Trump administration has imposed a $100,000 "entry fee" on H-1B visas, which is not only a tightening of immigration policy but also a precise blow to the core of India's technology services industry.
On September 22, according to Bloomberg, the Trump administration implemented strict new rules for the H-1B visa program, imposing a $100,000 fee on each worker entering the country. This policy targets India precisely, as Indians account for over 70% of the visa program's recipients.
The new rules require employers to pay a $100,000 entry fee for each H-1B worker, which will effectively destroy the program and force large outsourcing companies such as Infosys in Bangalore to rethink their business strategies. According to the report, the way this policy is implemented carries the flavor of economic sanctions and is a further escalation of punishment on this steadfast ally.
Analysis points out that for India, the issue is far more serious than a simple policy adjustment. By including the services sector in a trade war unforeseen by the Indian government, Trump's actions may be more than just cutting a few percentage points off the profit margins of outsourcing companies.
The new policy hits the core of India's technology services industry
The $100,000 entry fee for the H-1B visa program will devastate India's technology services industry. Indians account for over 70% of the visa program's recipients; the new rules will force Indian outsourcing giants that rely on this visa for talent to completely change their business models.
Reports say the implementation has caused widespread anxiety. Many H-1B visa holders currently working or on vacation abroad have been told by employers that they must return to the US before 12:01 a.m. on September 21, or risk being stranded indefinitely.
Although White House Press Secretary Karoline Leavitt later clarified that the entry fee was a one-time payment and only applied to the next H-1B lottery, not affecting current visa holders, the chaos during the announcement already caused damage. Numerous middle-class Indian families experienced severe anxiety over the weekend, fearing family separation.
The report noted that this move by the Trump administration expands a trade dispute originally limited to goods into the field of services trade. According to CCTV News, the US has previously increased tariffs on Indian goods from 25% to 50% as a punitive measure for purchasing Russian oil.
These tariff policies have already caused India's labor-intensive industries such as textiles, gems and jewelry, and shrimp farming to effectively lose their largest overseas market.
Analysis points out that the Modi government originally planned to mitigate the impact by cutting domestic consumption taxes, coordinated with the upcoming Hindu festival season. But the introduction of new H-1B rules has also impacted this mitigation strategy.
According to reports, for India, the issue is far more serious than a simple policy adjustment. By including the services sector in a trade war unforeseen by Modi's team, Trump's move may go far beyond merely cutting a few percentage points of outsourcing companies' profit margins.
Large US corporations fueled the rise of Indian software services exports, but this business model is now threatened by artificial intelligence. Generative AI has boosted productivity among top programmers, but is also cutting entry-level jobs.
Meanwhile, US lawmakers are considering imposing a 25% tax on US companies paying for services from foreign workers.
How US companies are responding
In the face of H-1B restrictions, US technology and financial industries have multiple coping strategies, including:
Companies may challenge the legality of the entry fee or seek exemptions.Silicon Valley and Wall Street may lobby for exemptions for foreigners with US STEM degrees; hospitals relying on H-1B visas to alleviate doctor shortages may also seek to retain access to cost-effective foreign doctors.
According to recent research by professors at Erasmus University and the University of Pennsylvania:
When hit by changes in the H-1B program, employers seek alternative talent through acquisitions. They step up M&A activity, especially targeting small domestic companies in regions highly concentrated with skilled workers. If visa restrictions prevent companies from hiring desired talent, they can always acquire other companies possessing similar foreign or local talent.
US companies may also choose to relocate foreign talent on a large scale to Canada, Australia, Singapore, or within India itself. Many current US-based employees may request transfers to these other regions.
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