The fee hike targets fresh visa applications. But the proclamation hints that extension or renewal of existing H-1B visas is expected to come under greater scrutiny starting 2026. Currently, the regular H-1B visa cap is set at 65,000, while the master’s cap (for advanced U.S. degree) is at 20,000. A lottery process decides who gets it.

The U.S. move will only have a marginal impact on India’s IT sector, says Nasscom, the tech industry lobby body. The implementation timeline will also give firms time to increase skilling programmes in the U.S. and enhance local hiring, it adds. Pointing out that the IT industry is spending over a billion dollars in upskilling and hiring local talent in the U.S., Nasscom stated, “H-1B is a high-skilled worker mobility and a non-immigrant visa that bridges the critical skills gap in the U.S. Salaries are at par with local hires. Moreover, H-1B workers are a mere decimal point of the overall U.S. workforce.”

Mid-cap IT firms such as Cyient, Mphasis, Persistent Systems, and Coforge were quick to issue statements to the stock exchanges saying the Trump administration’s move would not have a material impact on their financials. However, there has been a stoic silence from their larger counterparts. The whole bouquet of IT stocks has taken a beating on the BSE and NSE.

Meanwhile, there is consensus among analysts that the H-1B move could trigger increased offshoring, further jacking up the extent of automation and AI adoption at work.

Pointing out that ongoing localisation and near-shoring of the workforce have led to a significant drop in new visa applications by Indian IT firms over the past few years, Nomura analysts estimate the worst-case impact at 10-100 basis points on the company margins. They also expect the number of H-1B visas to decrease in the next cycle (FY27F) as companies often do not send all the approved employees in the first year. The employees holding a valid visa on the date could be sent during their visa-holding period. Apart from increased offshoring and automation, the pace of setting up global captive centres in India is expected to accelerate. “H-1B visa use is likely to be restricted to extremely critical roles where localisation of talent is not an option. Even here, the cost increase would be around $33,000/year or nearly 30% (assuming three-year amortisation of additional visa fees),” the Nomura note reads.

The Brief - IT sector

Can India’s IT Sector Weather America’s Visa Storm?