US’ $100K H-1B visa fee reminder of trade-uncertainty risks: FinMin

The decision by the U.S. government to impose a fee on new H-1B visa-seekers is a reminder of the risks of trade uncertainties affecting the otherwise unaffected services sector, according to the Finance Ministry’s monthly economic review for August 2025. The government believes that for now, the risks appear manageable, but they are there. 

The government believes the US imposition of a one-time fee of US$100,000 for all future H-1B visas can cause disruptions, the impact of which, particularly on the growth of future remittances and service trade surpluses, will need close monitoring if the restrictions persist.

On the economic front, the report says India’s economic outlook remains broadly optimistic despite a turbulent international environment marked by geopolitical uncertainties and shifting trade dynamics. Notably, the GDP growth surprised on the upside in Q1 FY26 by recording a 7.8% growth rate. 

The ministry report says GST 2.0 will lead to providing relief in terms of lower tax burden, increase consumption and provide a cushion against US tariffs. “Domestic components of demand have played a key role in supporting growth and are expected to remain so in the next half year as well. Recognising the need to strengthen domestic growth drivers amid these heightened external sector risks, the government has announced a rationalisation of the GST regime,” the government report adds. 

Additionally, the ministry says, it is likely to improve demand visibility for firms, enabling them to expand investment in additional capacities.

Inflation, says the ministry, is expected to remain well under control, with replenished reservoirs auguring well for the winter crop. “The revision in GST rates may lead to a one-time reduction in inflation over the next year.” 

Despite trade and tariff-related headwinds, India’s external sector has remained resilient, says the report. “Strong service exports and remittances have offset the merchandise trade deficit, while gross FDI inflows continue to rise, underscoring India’s appeal as an investment destination. Labour market momentum is expected to stay positive.”

Meanwhile, to offset the impact of the US' 50% tariffs on many Indian exports, India is also expanding its economic partnerships, signing a bilateral investment treaty with Israel and preparing a Comprehensive Economic Partnership Agreement with Oman to reduce duties, boost investment, and diversify trade beyond energy imports.

The ministry says the combination of strong growth, macro stability, and credible commitment to fiscal discipline over the previous few years has earned India its third sovereign ratings upgrade in FY26. Notably, after upgrades by Morningstar DBRS and S&P Global Ratings, Japanese credit ratings agency Rating and Investment Information, Inc. (R&I) upgraded India’s sovereign rating from BBB to BBB+ while retaining a stable outlook. The OECD revised India’s GDP growth forecast for 2025 upward by 40 basis points, to 6.7 per cent from the earlier 6.3 per cent projected in June, citing strong domestic demand and the impact of robust GST reforms.