(INDIA) Proposed changes to the U.S. H-1B visa program could hit India’s foreign income at a sensitive moment. India Ratings and Research (Ind‑Ra) estimates that tighter rules and sharply higher fees may reduce remittance inflows by up to $5 billion in FY 2026.
The forecast adds a financial dimension to a policy debate that often centers on tech hiring and wage protection inside the United States. It also highlights how cross-border visa decisions can shape household budgets in Indian states where overseas earnings fund education, healthcare, and small business plans.
Ind‑Ra’s drivers for the forecast
Ind‑Ra ties the expected drop mainly to two drivers:
- A potential $100,000 H‑1B visa filing fee
- Stricter qualification norms for applicants
If fewer Indian professionals secure H‑1B jobs, fewer families will receive money from abroad. With India drawing more than $120 billion in annual remittances, the projected $5 billion fall amounts to about 4–5% of total inflows—enough, Ind‑Ra warns, to widen the current account deficit and add pressure on the rupee.
VisaVerge.com notes the risk is amplified by policy overlap: visa costs, work rules, and taxes can all affect how much Indian workers send home, and when.
Ind‑Ra’s forecast and immediate transmission channels
Ind‑Ra outlines a likely chain reaction:
- Fewer H‑1B approvals for Indian workers due to higher costs and stricter criteria
- Lower household inflows as fewer workers send money home
- Slower consumption in districts that rely on overseas income
- Pressure on the rupee and a wider current account gap as dollar inflows soften
The research firm also factors in a separate policy move that could weigh on transfers: a 1% excise tax on certain international money transfers from January 1, 2026. While this tax is not the main driver, it adds friction at a time when wage-based remittances could already be shrinking.
Ind‑Ra’s remittance trajectory (headline figures)
- FY 2024: $120 billion
- FY 2025 (estimate): $118 billion
- FY 2026 (projection): $113 billion
That two-year slide—about $7 billion—would not displace India as one of the world’s top remittance recipients, but signals how targeted visa rules can ripple through global money flows.
Economic ripple effects across Indian states
The impact of a remittance shortfall will be uneven. States with higher dependence on overseas funds—Kerala, Telangana, Andhra Pradesh, and Punjab—tend to feel changes faster. A decline of up to $5 billion could affect:
- Consumption: slower spending on goods and services in remittance‑dependent towns
- Foreign‑exchange reserves: lower inflows, widening the current account gap
- Tax receipts: reduced collections tied to foreign income and cross‑border transactions
- Overseas‑linked sectors: softer demand for international education, business travel, and related services
Ind‑Ra also notes the potential shift in destination choices for Indian talent. If U.S. pathways become costlier or less predictable, skilled workers may pivot to countries with clearer routes—such as Canada, Australia, and Germany. That would alter where future wage earnings are generated and how remittance channels evolve.
Impact on IT/IT‑enabled services and employer behavior
India’s IT and IT‑enabled services sector remains a major source of dollar income, not only from workers physically in the U.S. but also from offshore centers serving American clients. Even so, costlier H‑1B access could:
- Complicate project staffing and reduce on‑site opportunities for specialists
- Shift some service models toward remote delivery to avoid high placement costs
- Force Indian firms to price bids assuming less on‑site availability
- Lead U.S. clients to add contingencies for delayed start dates or higher fees
Market watchers like Barclays and Ind‑Ra generally agree the remittance impact would be under $5 billion. Contrasting estimates suggest much smaller worst-case losses (for instance, figures near $400 million if zero Indian H‑1B applicants applied), underlining the sensitivity of forecasts to policy specifics and employer responses.
How this affects households — practical examples
- A software engineer in Texas who used to send ₹50,000–₹75,000 monthly to parents in Hyderabad might cut or delay transfers if visa costs rise or job stability falls.
- A nurse or data analyst in New Jersey may postpone funding a sibling’s tuition in Chennai.
Small choices by individual workers, multiplied across tens of thousands, create the macro trends Ind‑Ra is tracking.
Process mechanics and official resources
Employers file the petition on behalf of the worker using Form I‑129, the Petition for a Nonimmigrant Worker. Staying current with official guidance is essential during any rule change cycle.
- Official program overview: USCIS H-1B Specialty Occupations
- Petition form: Form I-129
Policy and industry responses recommended by Ind‑Ra
Ind‑Ra outlines steps governments and employers can take to soften the blow if H‑1B inflows slow:
- Diversify migration routes: Encourage skilled Indians to consider alternative countries with clearer pathways (e.g., Canada, Australia, Germany).
- Bilateral engagement: Keep New Delhi–Washington talks focused on smoother processing for high‑skill roles.
- Domestic talent retention: Expand high‑skill jobs at home through R&D hubs and incentives for global firms.
- Financial literacy for migrants: Help overseas workers plan for taxes, saving, and investment to keep remittances steadier.
- Data‑driven planning: Model the effects of foreign visa changes on remittances, the balance of payments, and state budgets to spot early signs of stress.
Ind‑Ra also emphasizes macro angles: a smaller remittance cushion could make the rupee more sensitive to dollar strength, and visa frictions can add noise to outsourcing contracts and IT service exports.
Employer and family planning considerations
- Employers: Stress‑test budgets, reprice project bids, and consider alternative staffing models if on‑site placement becomes costlier.
- Families: Build emergency buffers, pace large expenses (like tuition or home projects), and shop for remittance services that minimize costs if new taxes or fees apply.
- Workers in the U.S.: Consult company counsel before making assumptions about fees or eligibility; sudden moves can carry immigration risks.
Uncertainty and what to watch next
Some debate remains around the scale of the impact. Barclays and Ind‑Ra align on a likely cut below $5 billion, while other estimates suggest much smaller losses in extreme scenarios. The variance highlights how sensitive remittance modeling is to:
- Employer hiring plans and sponsorship decisions
- Worker choices about applying or relocating
- Exchange rate movements
- The final details of any rule changes or fee schedules
Ind‑Ra’s warning is not a verdict on the future of Indian mobility; rather it is a reminder that immigration policy is also economic policy. Visa rules in one country can quickly shape spending and saving in another. If remittance flows from the U.S. shrink, India will need to balance the export of talent with robust domestic job creation and diversified migration channels to absorb the next policy turn.
Key takeaway: The proposed H‑1B policy changes could trim India’s remittance cushion and have uneven effects across states and sectors. Planning—by governments, employers, and households—can reduce the shock and preserve long‑term mobility options.
This Article in a Nutshell
India Ratings and Research (Ind‑Ra) projects that proposed U.S. H‑1B changes — notably a possible $100,000 filing fee and stricter qualification norms — could reduce remittances to India by up to $5 billion in FY2026. With India receiving roughly $120 billion in remittances annually, a $5 billion decline (about 4–5%) could widen the current account deficit and put pressure on the rupee. The impact would be concentrated in remittance‑dependent states such as Kerala, Telangana, Andhra Pradesh, and Punjab. Employers may shift from on‑site placements to remote delivery, and workers might seek alternative migration destinations like Canada, Australia, or Germany. Ind‑Ra recommends diversifying migration routes, bilateral engagement, domestic talent retention, financial literacy for migrants, and data-driven planning. An additional 1% excise tax on some international transfers from January 1, 2026 could further reduce inflows. Forecast uncertainty remains, with alternate estimates ranging much lower depending on employer and worker responses.
