US visa cost increase to hit Indian IT services

The Indian government and industry insiders have expressed serious concern over the US administration's move to hike the H-1B visa fee, which is expected to affect the industrial chain and high-end talent flow among the United States, India and China as well as dim hopes for trade talk prospects with Washington.

The US new policy of demanding a new $100,000 visa fee on H-1B applications from less than $1,600 in general, announced on Friday, was put into effect on Saturday. Roughly three-fourths of current visa-holders are estimated to be from India, and about one-tenth from China.

"This measure is likely to have humanitarian consequences by way of the disruption caused to families," India's foreign ministry said in a statement on Saturday. "The government hopes that these disruptions can be addressed suitably by the US authorities."

Initial releases from the White House regarding the visa fee left thousands of Indian professionals and families in the US worried and confused. The panic followed advice from several US tech giants such as Amazon for their H1-B visa-holders to remain in the US or return immediately.

Speaking over phone, an Indian IT professional in Silicon Valley, who chose not to be identified, said Indians in the US were afraid that some of their colleagues and friends will be unable to return to work. An emergency helpline had been set up by the Indian embassy in Washington for its citizens.

India's leading IT industry body, the National Association of Software and Service Companies, or Nasscom, described the sudden implementation timeline as "a matter of concern".

"A one-day deadline creates considerable uncertainty for businesses, professionals and students across the world," it said in a statement on Saturday.

The association also warned that India's technology services companies will "be impacted as business continuity will be disrupted for onshore projects which may require adjustments".

Nilesh Shah, managing director of Kotak Mahindra Asset Management Company in India, said in a statement that US restrictions on H-1B visa will hurt Indians more than Indian IT services companies. "We have to create an ecosystem in India so that our talent doesn't have to go abroad."

For India, economic strain and reduced export access to the US create pressures that may inadvertently push New Delhi to engage more with Beijing as part of its balancing strategy, said Nanda Kishor, head of the Department of Politics and International Studies at Pondicherry University in India. Simultaneously, China may gain from trade and talent diversions, he said.

Ripple effects

Nasscom also pointed out that the fee can potentially have ripple effects on the US' innovation ecosystem and the wider job economy, emphasizing that "high-skill talent is vital to driving innovation, competitiveness and growth for America's economy".

Bommuluri Bhavana Rao, an assistant professor of international law at the University of Delhi, said the fee may affect companies wanting to expand their businesses in the US, and can serve as an opportunity for Indian companies to "look east "and expand their businesses in Southeast Asia.

Dalbir Ahlawat, a senior lecturer at Australia's Macquarie University, agreed, saying the positive side of H-1B visa for India is that entrepreneurs may invest in India to harness the local talent pool and benefit the local professionals.

The writer is a freelance journalist for China Daily.