Indian IT stocks declined on the Bombay Stock Exchange after US President Donald Trump announced an increase in the fee for new H-1B visas. The new fee of $100,000 is a steep rise from the earlier $1,500. The move created fresh worries for the IT sector, which already faces weak demand.
Tata Consultancy Services (TCS) and Tech Mahindra led the decline among large firms, both falling by more than 3%. HCLTech saw a more minor fall of 1.8%. Mid-sized companies were hit harder. LTIMindtree dropped 4.5%, Mphasis 4.6%, Persistent 4.1%, and Coforge 4.3%.
Brokerage firm Equirus Securities stated that Indian IT companies still rely on H-1B visas for 25–35% of their US workforce, although this share has decreased in recent years. Kotak Institutional Equities added that revenue had already fallen for four of the top five IT firms in the June quarter. Margins also shrank, as cost-saving measures such as better use of staff and lower subcontractor use have already been stretched.
Reports show that most companies will not pay the new fee because it makes the visa model too costly. The median salary for H-1B roles ranges from $80,000 to $ 120,000. Adding another $100,000 makes such postings unworkable.
To adjust, firms would be expected to respond by increasing offshoring to India and other low-cost countries. They could also establish near-shore centers in Canada and Latin America, which share the same US time zones. Hiring more local workers in the US could be another option.
Analysts also say companies will look to renegotiate deals so that some of the added costs are spread out to clients. These trends will help alleviate the pressure over time, but near-term issues may persist.
The Indian Rupee hit a record low after the visa fee announcement. Worries over US tariffs and higher service costs added to the fall. The Reserve Bank of India stepped in to reduce losses, but the rupee remains one of the weakest in Asia this year.
Experts believe Indian IT companies will adapt. Over the past eight years, they have already cut their reliance on H-1B visas. Stronger use of offshore centers and more local hiring in overseas markets are expected to help firms recover.
While the new rules will bring short-term concerns, the industry is likely to find new ways to keep projects running and protect growth in the long run.