It's unclear what President Donald Trump's unprecedented attack on immigration will mean for the future of US technological dominance. What is clearer, however, is the immediate challenge he has set for his friend PM Narendra Modi, just days after wishing him a happy 75th birthday.

Indians account for more than 70% of all H-1B visas. A steep $100,000 entry fee paid by employers for each worker entering the US through the program will effectively kill it, forcing large outsourcing firms like Bengaluru-based Infosys Ltd. to reconsider their business strategy.

Key Highlights

• Indian IT stocks plummet up to 6% as $100K H-1B fee disrupts U.S. staffing plans.
• Companies explore L-1 visa alternatives; $100K H-1B fee exceeds many professionals' annual salaries.

What should concern Prime Minister Modi more is how the new rule is being implemented. Introduced as a travel restriction, it appeared to be an economic sanction, escalating the punishment meted out by the US president to a staunch ally in recent months.

First, Washington imposed a 50% duty on merchandise exports, informing New Delhi that its 25% reciprocal tariff would be doubled because its purchases of Russian oil were funding Vladimir Putin's war in Ukraine. India, which has effectively lost access to its largest overseas market for textiles, gems and jewelry, shrimp farming, and other labor-intensive industries, was hoping to soften the blow with a tax cut for domestic consumers, scheduled to begin this week with the start of the annual Hindu festival season.

Trump’s announcement left many middle-class Indian families anxious. H-1B visa holders overseas were told to return before 12:01 a.m. Eastern time on September 21, or risk being stranded—along with their families.

By the time White House Press Secretary Karoline Leavitt clarified the fee is a one-time payment for new applicants only, panic had set in. For immigrant families, the path to permanent US residency now seems daunting. Many current US employees are considering relocation—to Canada, Australia, Singapore, or even India.

US tech and finance sectors could challenge the fee legally, seek exemptions, or focus on acquiring domestic talent in regions with high skilled-worker concentrations. Hospitals relying on H-1B doctors may also lobby to retain access to foreign professionals.

Also Read: India & US Set for 1st Trade Talks after Russian Oil Tariff Clash

For India, the stakes are higher. Trump’s move adds pressure amid outsourcing, generative AI replacing entry-level jobs, and proposed US taxes on foreign worker payments. Political alignment with the US, which fueled India’s software exports, now faces uncertainty.

Against high youth unemployment and regional unrest, Modi’s optimism—citing the GST reduction to boost growth—may be tempered as wage pressures threaten consumption. Trump’s actions have intensified uncertainty for India’s workforce and IT sector.