Trump’s H-1B visa fee hike poses risk to India’s remittances, rupee

Core Viewpoint - The recent increase in H-1B visa fees by the US government is expected to negatively impact India's services sector, reduce remittance inflows, and exert pressure on the Indian rupee [1][4]. Impact on Remittances - Highly skilled Indian migrants contribute significantly to remittances, with the US accounting for nearly 28% of these inflows, approximately $35 billion annually [2]. - A decline in H-1B visa holders from India could lead to a reduction in remittances, with a worst-case scenario estimating a decrease of about $400 million annually if Indian applications for H-1B visas fell to zero [3]. Effects on the IT Services Industry - The visa changes could disrupt India's $280 billion IT services industry, which relies on the H-1B program to deploy engineers to international clients, causing stocks of major outsourcing firms like Tata Consultancy Services and Infosys to drop over 3% [5][6]. - The IT sector is crucial for India's economy, contributing over 7% to GDP and employing nearly six million professionals globally [6]. Broader Economic Implications - The changes in visa policy may increase medium-term growth risks for the South Asian economy and pressure the Indian government to enhance domestic demand [7]. - While the intention behind the visa changes is to protect US jobs, they may inadvertently raise operational costs for American corporations, potentially leading to an expansion of global capability centers in India by companies like Microsoft, Google, and Morgan Stanley [8]. Balance of Payments and Trade Negotiations - The overall impact on India's Balance of Payments is expected to be modest in the near term, but concerns remain regarding trade negotiations and future pressures on offshoring [10].