Finance Ministry: H-1B Fee Shock Real, Yet Manageable for India

(INDIA) India’s finance ministry says the United States’ new one-time H-1B visa fee of USD 100,000 on fresh petitions presents a “manageable, but real” risk to India’s services sector, even as officials warn that the situation needs close, ongoing watch. The assessment, published in the ministry’s Monthly Economic Review for August, acknowledges that the fee shock lands squarely on a key engine of India’s growth and jobs—IT and software services—at a time when those exports matter more than ever for India’s external balance.

The immediate concern is exposure. Indians have been the largest group of H‑1B beneficiaries for years, with over 65,000 visas issued annually under the regular cap and another 20,000 reserved for U.S. master’s degree holders. Big U.S. tech firms—Microsoft, Meta, Apple, Google—and major Indian IT companies—Infosys, TCS, Wipro, Tech Mahindra—rely on H‑1B to place project teams on site. A sudden H-1B visa fee at this scale could force employers to rethink staffing models, billing rates, and timelines for U.S. clients.

Officials frame the risk as contained for now because India’s export services are spread across many regions and because delivery models have changed since the pandemic. Firms can:

• shift more work offshore,
• extend remote or hybrid setups, and
• reserve on‑site roles for the most critical project phases.

Larger companies—those with stronger cash flows and global footprints—are also better placed to absorb compliance costs or spread them across multiple contracts without major disruption.

Still, the ministry calls the move a “reminder” that services, once seen as protected from trade shocks, are not immune. The warning comes against a telling backdrop. In August, India ran a merchandise trade deficit of USD 26.49 billion, but services generated a USD 16.61 billion surplus. That surplus helps steady India’s external balance, making the health of IT and consulting exports more than a sector story—it’s a macroeconomic cushion.

If the H-1B visa fee slows new placements or pushes work to pricier channels, the effects could ripple through export earnings, hiring plans, and project delivery.

Policy change and immediate exposure

While companies await fine print and implementation timelines, executives in Bengaluru, Hyderabad, and Pune are already drawing up contingency plans. Many are stress‑testing their U.S. exposure, counting not just the number of H‑1B candidates in the pipeline, but also:

• project milestones that assume on‑site presence, and
• contract clauses that may allow cost sharing.

For projects that must remain on site—such as those handling sensitive client data within a U.S. facility—some firms are modeling scenarios where the new fee is amortized across multi‑year contracts to soften the shock.

In practical terms, employers filing H‑1B petitions use Form I-129 to request classification. Companies reviewing upcoming filings are checking whether roles can be:

1. re‑sequenced,
2. shifted offshore, or
3. otherwise redesigned while they reassess on‑site needs.

For readers seeking official process details, the U.S. government page for Form I-129 is available at USCIS: Petition for a Nonimmigrant Worker (Form I-129). Firms emphasize that process requirements remain the same unless the U.S. issues further rule changes, but the price jump alters the business case for many placements.

The ministry’s view of “manageable” rests on four pillars it highlighted:

• Geographic diversification of export markets and delivery centers
• Alternate delivery models (remote/hybrid/offshore) developed since the pandemic
• Ability of larger firms to carry costs or pivot staffing quickly
• Broader reforms that improve domestic competitiveness and lower operating costs

In other words, the fee is a shock, but not a knockout—for now. However, the report stresses close monitoring, implying that a prolonged or expanded cost regime could test smaller providers first and then move up the chain.

VisaVerge.com reports that Indian nationals formed a strong majority of recent H‑1B approvals, which explains why India’s IT industry is reacting quickly to adjust staffing and client plans. According to analysis by VisaVerge.com, employers will likely split the new costs among themselves, clients, and in some cases employees. Larger firms have more room to carry the burden during transition periods, while mid‑sized providers are more exposed—potentially widening the gap between top-tier firms and smaller players dependent on on‑site deployment.

Economic context, state-level reforms, and industry response

The ministry set the fee shock within an economy still showing solid momentum. GDP expanded 7.8% year‑on‑year in April–June 2025, and several private forecasts for FY26 have been nudged up to around 6.9%, slightly above the government’s projection range of 6.3%–6.8%. Inflation is expected to stay “well under control,” helped by a good monsoon, better reservoir levels, and easing pressures in rural supply chains. That macro picture gives policymakers room to support the services sector if external headwinds grow stronger.

To build resilience from the ground up, the finance ministry urged Indian states to speed up “targeted deregulation.” Suggested steps include:

• Allowing more flexible factory work rules for women, with safety and transport measures in place
• Rationalizing parking and industrial land norms to lower setup costs
• Reducing surcharges on industrial electricity which weigh on margins
• Expanding public–private roles in approvals and inspections to speed up timelines
• Streamlining local permits and compliance so firms can scale quickly when export orders come in

These state actions, alongside central reforms such as GST streamlining and regulatory easing, could help Indian providers keep work in India and sustain exports—supporting India’s external balance.

Boardroom playbook and operational shifts

In boardrooms, the playbook is already taking shape. Executives are moving ahead with steps the ministry encouraged:

• Stress‑test U.S. exposure in revenue and staffing terms
• Expand remote and offshore delivery where client rules allow
• Rework contracts to include cost‑sharing and greater flexibility on ramp‑ups
• Build deeper pipelines in Europe, the Middle East, Africa, and Southeast Asia
• Coordinate through industry bodies such as NASSCOM for policy dialogue
• Track legal and policy updates in the U.S., including any phased rollout

For many projects, firms will weigh whether to use fewer on‑site roles and more offshore engineers with longer handover windows and tighter documentation standards. Where the fee makes fresh H‑1B hires too costly, companies may:

• prioritize U.S. permanent residents and citizens already on staff, and
• expand training for India‑based teams to handle higher‑value tasks from offshore.

Clients who demand on‑site work for compliance reasons may face revised quotes, with providers explaining that the H-1B visa fee is now a material input cost.

People, hiring, and skills

There is also a people story behind the policy. Young engineers who built careers around short U.S. assignments worry that on‑site opportunities could shrink or shift later in their progression. Recruiters are advising candidates to focus on roles with cross‑border responsibilities that can be executed from India, with occasional travel for critical phases.

Managers are planning more shadowing and mentorship so India‑based staff can take over work that previously required longer on‑site stints.

Some U.S. employers are concerned about time‑to‑hire. If each fresh placement carries a steep one‑time fee, teams may slow hiring as they revisit budgets—potentially delaying product cycles or client deliveries. Several Indian providers say they will counter delay risk by:

• building larger bench strength in India, and
• using standardized tools to spin up teams quickly without waiting for on‑site clearances.

This approach supports continuity for U.S. clients while helping keep export earnings flowing into India’s external balance.

Scenarios, mitigation and longer-term outlook

What happens if the fee cuts H‑1B demand more than expected? The ministry’s message is to “monitor and adapt.” Potential firm responses include:

• heavier reliance on short client visits and staggered on‑site rotations for senior specialists
• investment in secure offshore facilities that meet client standards for data and IP
• adding remote‑first clauses to contracts with performance guarantees tied to uptime and delivery metrics

The debate over U.S. competitiveness also plays into the narrative. Senior figures in the American tech industry argue that access to global talent helps the United States maintain its edge. If the H-1B visa fee lowers the number of new high‑skill workers on site, that could slow innovation on some projects or raise costs that are ultimately passed to customers.

But in the near term, the policy shift is primarily a cost shock for India’s top exporters, and that’s why the ministry is pressing for domestic reforms that make it cheaper and faster to build from India.

For India’s states, the checklist is practical and urgent:

• cut red tape,
• reduce power costs,
• digitize approvals, and
• treat time as a competitive asset.

For firms, the next quarter is about discipline: line‑by‑line reviews of U.S. projects, clear client conversations about cost changes, and tighter execution of remote delivery. For workers, it’s about building skills that travel well—cybersecurity, cloud architecture, AI product management—so career growth does not depend solely on being physically on site.

Through it all, the core numbers remain a guide. Services surpluses have helped offset goods deficits, protecting India’s external balance during volatile times. If the H-1B visa fee lifts costs at the margin, the mix of geographic spread, remote delivery, and domestic reform can help keep that surplus steady.

The ministry’s phrase—“manageable, but real”—carries a clear message: the risk is not a crisis, but it is a test. How companies, clients, and states respond over the next few quarters will show whether India turns a fee shock into a push for stronger, more flexible export delivery from home.