Mumbai: The Indian rupee opened weaker on Monday, trading at 88.16 against the U.S. dollar, reflecting investor concerns over a newly announced $100,000 fee on H-1B visa applications in the United States. The market reaction underscores the broader implications for India’s information technology sector, which relies heavily on deploying skilled workers to the U.S. through these visas.
India’s IT stocks bore the brunt of the announcement, with the Nifty IT index declining by 2.8%. Leading companies such as Infosys, Tata Consultancy Services, HCLTech, and Wipro each recorded approximately a 2% drop in share prices. Analysts note that the sector derives nearly 57% of its revenue from U.S. clients, making visa policies a critical determinant of profitability. ICICI Securities estimated that the visa fee could reduce profit margins by up to one percentage point and earnings by about 6% for firms continuing to hire under the H-1B program.
The U.S. administration clarified that the $100,000 fee applies only to new visa applications and is a one-time charge, not an annual levy. While this has provided some reassurance, IT companies remain cautious, as the new cost structure could influence hiring strategies and long-term operational planning.
Beyond the IT sector, economists warn that the visa fee may affect India’s software exports, professional consultancy services, and remittance inflows. Increased deployment costs for Indian professionals in the U.S. could diminish competitiveness and affect profit margins. Compounding these pressures is a strengthening U.S. dollar, which has extended a four-day gain streak, keeping currency markets on alert.
India’s Trade Minister, Piyush Goyal, is scheduled to hold trade discussions in Washington this week, aiming to advance negotiations on a long-delayed trade agreement with the United States. The H-1B visa fee introduces an additional layer of complexity to these talks, with Indian officials pressing for assurances that the move will not disproportionately affect the IT sector or bilateral trade flows.
Market participants are closely monitoring developments, with the rupee’s trajectory expected to hinge on both the outcomes of U.S.-India trade talks and any further policy changes regarding the H-1B visa program. Analysts caution that while short-term volatility is likely, strategic negotiations could stabilize investor sentiment and mitigate the impact on India’s key service exports.