Nasscom seeks calm over H-1B fee shock but Indian IT faces deeper challenges

The National Association of Software and Service Companies (Nasscom) on Monday, 22 September, sought to temper industry anxiety after Washington clarified details of US President Donald Trump’s startling decision to impose a USD 100,000 fee on new H-1B visa petitions.

But while the trade body framed the clarification as a relief, the move underscores the mounting vulnerability of India’s flagship technology sector to US political turbulence and long-standing structural issues.

In a statement issued on 22 September, Nasscom pointed to a weekend FAQ from the US Citizenship and Immigration Services (USCIS) which described the 19 September proclamation as an “initial, incremental step” towards reforming the H-1B programme to curb abuses and protect American workers.

The White House subsequently confirmed that the hefty levy will apply only once, to fresh petitions, and will not touch existing visa holders. The new fee will take effect in 2026.

Nasscom welcomed the clarification as easing “immediate ambiguity” over eligibility and timelines, noting that companies now have time to expand US-based skilling initiatives and local recruitment.

The industry lobby highlighted that Indian IT firms have already invested over a billion dollars in local training and hiring and claimed that the share of H-1B workers within the top Indian employers’ US workforce is “less than one per cent”.

Data cited by Nasscom shows H-1B approvals for the ten largest Indian and India-centric firms dropped from 14,792 in 2015 to 10,162 in 2024.

Yet the association’s reassurances cannot mask the sector’s deepening dependence on US regulatory goodwill. Even if the immediate financial impact is “marginal,” a USD 100,000 fee per petition represents a deterrent for smaller players and start-ups seeking to place niche talent in the United States. 

The 2026 timeline also leaves the industry exposed to further policy shifts in a volatile US election cycle. Although the new H-1B fee takes effect only in 2026, the timeline leaves Indian IT firms exposed to further policy shifts amid a volatile US political landscape.

With mid-term and presidential elections looming, changes in administration or Congress could tighten visa rules, increase fees, or impose stricter eligibility requirements. This prolonged period of uncertainty complicates long-term planning for talent pipelines, US expansion, and client contracts, keeping companies on edge despite the temporary reprieve.

The Indian IT sector, already grappling with slowing growth, tightening margins and a shift towards automation, faces the prospect of rising on-shore costs as American clients push for local hiring.

While Nasscom emphasised that H-1B salaries are “at par with local hires” and that visa holders represent only a “decimal point” of the US workforce, the fact remains that the programme remains politically charged in Washington.

Industry leaders now confront a two-track challenge: accelerating US hiring and training to blunt future visa shocks, while lobbying for a “predictable and stable” mobility framework that Nasscom insists is vital for innovation and investment.

The coming months will reveal whether Indian IT firms can turn the temporary breathing space offered by the 2026 deadline into a lasting hedge against an increasingly protectionist American labour market.