The Trump administration has deployed a $100,000 annual fee on H-1B visas, a move designed to obliterate the business models of India’s IT giants and Big Tech’s wage arbitrage schemes.

• However, as of September 22, 2025, the U.S. government has clarified that the new $100,000 fee is a one-time payment that applies only to new H-1B visa petitions filed on or after September 21, 2025.

About H-1B

• Introduction: The H-1B visa was introduced through the Immigration Act of 1990 to address specialized labor shortages in the rapidly growing US technology sector.
• Purpose: It is intended to bring foreign talent into the United States, filling roles that domestic workers cannot adequately meet.
• Eligibility: The visa is designated for Specialist Occupations, requiring a Bachelor’s degree or higher in fields such as Information Technology (IT), engineering, medicine, or research.
• Allocation and Selection: The United States issues 85,000 H-1B visas annually, but applications often exceed 4.5 lakh, with selection determined by a lottery system.
• Indian Participation: Over 70% of H-1B visas are granted to Indian professionals, reflecting India’s significant contribution to the US tech workforce.

New H-1B Rules

• Abuse Concerns: US politicians contend that US companies are abusing the H-1B provision to import cheap labour rather than specialized talent.
• Indian Companies: Indian companies, such as TCS and Infosys, are specifically accused of hiring low-cost Indian engineers through H-1B visas for US projects, instead of employing higher-cost local US engineers.
• Domestic Political Impact: These concerns have made the issue prominent in US domestic politics, with claims that the H-1B policy lowers American wages and reduces job opportunities for US citizens.
• Policy Change: The US government announced a $100,000 (US$1 lakh) fee for all new H-1B applications, which must be paid by the sponsoring company.
• Clarification: Following confusion, the White House clarified that the fee is one-time and applies only to new applications submitted after 21 September, not to existing visa holders.

Consequences of New H-1B Rules

• Impact on Indian Professionals: Indian professionals are the most affected,especially those who took out education loans to study for opportunities in the US.
• Impact on US Businesses: While large firms might afford the fee, small US startups and medium enterprises will struggle to hire Indian talent. 
  • The H-1B workforce played a major role in building Silicon Valley. 
  • Restricting this talent may reduce US innovation and competitive advantage globally.
  • The policy also increases inequality between major corporations and smaller startups.
• Geopolitical Effect: Talented individuals who cannot go to the US may seek opportunities in other nations, such as China, benefiting those economies. 
• Effect on India: Some view the restriction as an advantage for India, potentially leading to “Brain Remain“ instead of Brain Drain.
• Trade and Diplomacy: The H-1B policy acts as a negotiation card for the US during trade deal discussions with India (e.g., exchanging H-1B concessions for agricultural trade concessions).
• Impact on Indian IT Giants: Companies like TCS and Infosys, which rely on cheaper labour sourced from India for their US projects, will face losses as they will be forced to hire local US citizens.

Way Forward

• Policy Clarity: The US government must issue clear guidelines to resolve the existing chaos regarding the H-1B policy’s implementation.
• Industry Lobbying: India should prioritize industry lobbying in the US to influence policy decisions, as lobbying is an accepted practice there.
• Diplomatic Engagement: The government should use diplomatic pressure and negotiate with the US for concessions.
• Domestic IT Strengthening: India must concentrate on strengthening its domestic IT ecosystem to reduce dependency on foreign H-1B opportunities.
• Support Domestic Schemes: India should reinforce domestic initiatives like Stand Up India, Startup India, and Make in India to provide local employment opportunities.

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