H-1B shock: A test for Indian IT

The Trump administration has massively hiked the onetime H-1B visa fee to $100,000 for new applicants, which previously ranged from $2,000 to $5,000, depending on the size of the company applying for the visa.

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It will significantly impact Indian information technology (IT) companies, which rely heavily on these visas for onsite professionals to execute projects. H-1B visa was introduced to fill skill gaps in the United States workforce.

Indian IT and IT-enabled services (ITes) have boomed, growing ata compound annual growth rate of 12.1 percent over the last 30 years, with the US being a dominant destination, accounting for 54-55 per cent of India’s software services exports in recent years. India exported services worth over $100 billion to the US in 2022-23. The IT sector has played a major role in transforming India’s economy. The Indian IT sector contributes 7.4 per cent of gross domestic product (GDP), and it is projected to rise to 10 per cent by 2026. The IT sector provides about 5.5 million jobs directly. IT services exports were at $194 billion in 2022-23, making India’s current account resilient. With overso percent of IT services exports ata risk of getting adversely impacted, there will be implications forIndia’s GDP and employment.