Hiked US H-1B visa fee has far-reaching consequences

Ajay Banerjee

U S President Donald Trump’s move to impose a hefty $1,00,000 fee for obtaining a H-1B work visa could prove to be a litmus test for future India-US ties. The fee is a literal roadblock to restrict the entry of Indians to the US. It would have a cascading effect on students, impact growth of IT sector and cast a shadow on the Quad.

The Rs 86 lakh one-time fee for seeking H-1B visa, which kicked in from September 21 onwards, is not just a lever on India to lower trade barriers or snap ties with Russia. It is signifying a US foreign policy reset, from strategic cooperation to transactional engagement, with developing nations like India.

Trump has to cater to his MAGA - Make America Great Again - vote base that is against any immigration. Any effort by the two countries to recalibrate ties from here depends on how both navigate the unpredictability.

External Affairs Minister S Jaishankar, on a visit to the UN, met his US counterpart Marco Rubio in Washington DC on Monday. Rubio reiterated “India is a relationship of critical importance to the United States”.

But things are distant far from what Rubio is saying. Trump’s recalibration of ties with India started in a graded manner. First, on August 6 he announced 25% tariff on Indian goods being imported into the US. A couple weeks later, 25% of punitive tariffs were imposed on India for buying crude oil from Russia. This makes Indian goods the most taxed on reaching the US, effectively impacting the $86.51 billion worth Indian exports to the US. Trump justified the punitive tariff, saying it was to stop the flow of revenue to Russia that is waging a war against Ukraine.

The fee hike for Visa and new proposed rules for students are like speed breakers on a smooth highway.

H-1B visa issue has deeper consequences

The impact of hiked H-1B visa fee would mean fewer people getting jobs in the US, which in turn would have a negative impact on the $38 billion annual remittance, the money Indians earn in the US and send to their families back home. As many as 4.42 lakh Indians are enrolled as students in educational courses in the US. Their transition from academics to having a career depends on securing H-1B visas.

A fee of $1,00,000 means not many companies would be ready to pay that much to hire fresh graduates. Parents, who paid thousands of dollars in annual fee for education of their children in the US, are worried. A three-year educational course in the US in a top university can cost anything between Rs 1 crore and Rs 1.5 crore. Most parents take loans to pay the fee.

Separately, the duration of ‘student visa’ is proposed to be restricted to four years, says the US Department of Homeland Security. The move is expected to impact lakhs of Indians, who are presently studying in the US and aimed to complete their PhD or sector specialisations.

The abrupt visa fee hike impacts Indians as they make up over 71% of all 7.30 lakh H-1B approved applications in recent years, according to US Citizenship and Immigration Services (USCIS).

Another 5 lakh people hold dependent H-4 visas, which allows the spouse and unmarried children under 21 of a principal H-1B visa holder to stay in the US. The US awards 85,000 H-1B visas per year on a lottery system.

The Ministry of External Affairs has warned of “humanitarian consequences”.

Impact on IT sector

Indian IT sector would be hit. Major firms like Infosys, TCS and Wipro rely heavily on H-1B visas for their workers, who are placed in hubs in California. The fee hike increases project costs and may delay US-based operations. Indian professionals work in AI, quantum computing and software engineering. Already media reports from the US are indicating that the hiked fee would not be levied on doctors.

Conversely, Indian companies could use this Trump-caused upheaval as an opportunity for self-reliance by pushing multinational firms to expand operations in India, turning it into a global R&D and back-office hub.

The impact on Quad

The first term of Trump administration saw a notable strengthening of the Indo-US strategic partnership, largely driven by a shared concern over a rising China. This period was characterised by fast-pacing the Quad, comprising US, India, Japan and Australia. Even in January this year, a day after Trump took over, Rubio conducted a meeting of Foreign Ministers of Quad countries. For now, Trump’s visit to India for the Quad leaders’ summit is undecided.

Recent US diplomatic overtures towards Pakistan have been viewed with concern in India. These moves have led to perceptions of a potential dilution of the US’s focus on the strategic partnership with India in the Indo-Pacific.