In a move described by analysts as a “serious setback” to US and India relations, President Donald Trump has announced a new $100,000 fee on every new H-1B skilled-worker visa application.
The decision directly targets Indian professionals, who make up more than 70% of H-1B visa holders, and threatens to disrupt India’s $280 billion technology and services industry.
Pressure on India’s Technology and Services Sector
Bloomberg reports that the new fee acts as a “non-tariff barrier” aimed at the heart of India’s economic model, which depends heavily on exporting skilled talent.
According to Biswajit Dhar, professor of economics at the Institute for Social and Economic Studies in New Delhi, the $100,000 charge is designed to exclude Indian professionals and is a heavy blow to US and India relations.
India’s information technology and business-services sector accounts for about 55% of the country’s GDP—far larger than its manufacturing share of 17%—and directly employs around six million people.
The US restrictions now risk slowing growth and reducing the ability of Indian firms to expand in their largest overseas market.
Threat to Remittances and Currency Stability
The new visa rules could also curb remittances from Indian workers in the United States, which total about $35 billion annually.
Analysts warn this would add pressure on the Indian rupee, already one of Asia’s weaker-performing currencies.
How the Newly Imposed Trump’s Tariffs Affect US and India Relations?
The H-1B visa restrictions come against a backdrop of mounting trade and geopolitical tensions.
In August, the Trump administration imposed a 50% tariff on Indian exports in retaliation for New Delhi’s continued oil purchases from Russia.
Although the two countries had tried to ease tensions through renewed trade talks and a congratulatory phone call from Trump to Prime Minister Narendra Modi, the new visa fee has reversed the positive momentum.
Bloomberg also reports that the US is pressing G7 leaders to toughen tariffs on both India and China over their ties with Moscow.
New Delhi has refused to scale back Russian energy imports, putting it on a collision course with Washington.
Domestic Challenges and Political Backlash in India
India faces high youth unemployment, which the Centre for Monitoring Indian Economy estimates at nearly 40%.
The new H-1B visa policy intensifies fears of job losses among young professionals hoping to work in America’s technology and service sectors.
Opposition parties have increased their criticism of Prime Minister Modi’s response.
The Congress Party called his silence a sign of weakness, while left-wing groups described the US measures as “economic bullying.”
Long-Term Implications for Bilateral Ties
Bloomberg notes that the dispute has shifted from tariffs on goods to the core of India’s service-based economy.
Analysts warn the move could weaken New Delhi’s bargaining position in future negotiations and make it harder to resist US demands on energy, defense and other sectors.
Deborah Elms, head of the Heinrich Foundation for Trade Policy in Singapore, observed that India has long highlighted the importance of the free movement of people in trade talks.
“That issue was never a top priority for Trump,” she said.
“Now it sits at the heart of the negotiations.”
Source: Al-Jazeera
