New Delhi: Indian information technology (IT) stocks suffered notable declines on Monday following the U.S. government’s announcement of a $100,000 fee for new H-1B visa applications. The development has sent ripples through India’s IT sector, raising concerns about increased operational costs and potential disruptions in the flow of skilled labor to the United States, which accounts for more than half of the sector’s revenue.
The NIFTY IT index dropped 2.6% by the close of trading, recovering slightly from an initial slump of nearly 4%. Shares of major IT companies such as Infosys, Wipro, and Tata Consultancy Services (TCS) fell around 2%, while Persistent Systems saw the steepest decline at 4%. U.S.-listed shares of Infosys and Wipro also declined as investor sentiment turned cautious. Analysts note that the market reaction reflects fears of higher costs and potential delays in staffing critical projects reliant on H-1B visa holders.
Industry body Nasscom clarified that the $100,000 fee applies only to new H-1B visa applications starting in 2026 and does not affect existing visas or renewals. This announcement has provided some relief to IT companies, reassuring stakeholders that current operations will remain largely unaffected in the short term. Despite this, investors remain wary of long-term strategic implications for the sector, which generates approximately 57% of its $283 billion revenue from the U.S. market.
The new policy may compel IT companies to rethink their staffing models, potentially raising costs and impacting profit margins. Analysts estimate the fee could reduce sector earnings by up to 6% and decrease profit margins by around one percentage point if firms continue relying heavily on H-1B visa workers. Companies may need to increase local hiring, invest in upskilling, and explore alternative global staffing strategies to mitigate potential losses.
The announcement also weighed on the Indian rupee, which fell slightly to 88.16 against the U.S. dollar. Financial experts caution that higher visa fees could affect software service exports, remittance inflows, and ongoing trade discussions between India and the United States. Trade Minister Piyush Goyal is scheduled to visit Washington shortly, with expectations that these issues will feature prominently in bilateral talks.
While the immediate market reaction has been negative, the long-term impact on India’s IT sector will depend on how companies adapt to the new visa policy and diversify their global operations. Industry observers note that the situation underscores the sector’s vulnerability to foreign regulatory changes and highlights the need for strategic planning to safeguard growth and profitability.