Indian information technology stocks experienced a significant decline on Monday, following the announcement by U.S. President Donald Trump regarding a hefty fee increase for new H-1B visa applications. The move poses a potential threat to the sector’s well-established model of employing skilled workers in the United States.
On Friday, Trump revealed that companies would face a fee of $100,000 for filing new H-1B applications, a decision that has raised concerns among Indian IT professionals, as a staggering 71% of approved H-1B beneficiaries last year were of Indian origin. Following this announcement, the tech sub-index saw a decrease of 2.6%, having initially slipped nearly 4%. However, Indian IT industry body Nasscom later clarified that the increased fees would only apply to new applications, providing some relief amidst a flurry of anxiety.
Amidst the initial uncertainty surrounding the new regulations, many existing H-1B visa holders felt compelled to return to the U.S. urgently, fearing potential barriers to re-entry once the new rules were implemented. This rush reflects the panic that ensued among tech workers, as they sought to secure their positions in the U.S. market.
As the market responded to the unfolding situation, U.S.-listed shares of prominent IT companies such as Infosys and Wipro dropped by 3.4% and 2.1%, respectively, on Friday. On Monday, all ten stocks within the tech sub-index closed lower, with Persistent Systems experiencing the sharpest decline at 4%. Other major players, including TCS, Wipro, and Infosys, also reported losses of around 2% each.
The Indian IT sector, valued at $283 billion, relies heavily on U.S. work visa programs, with 57% of its revenue sourced from the U.S. market. Analysts at TD Cowen commented that Trump’s order comes at a time when the industry is already grappling with existing pressures, including geopolitical tensions, macroeconomic uncertainties, and concerns over structural changes brought on by advancements in generative AI.
This year, IT stocks have emerged as the worst performers, plummeting by 15.6%, in stark contrast to the benchmark Nifty 50 index, which has recorded a gain of 7.1%. The latest developments surrounding H-1B visas further exacerbate the challenges facing the sector, leaving stakeholders anxious about the future.
