New restrictions on H-1B visas in the US are not expected to greatly affect the money sent back to India by workers overseas, according to a report from Barclays.
As reported by TOI, the losses are estimated to be under $5 billion, a small portion of the total $83 billion in remittances.
The rise of global capability centres, many of which are US-based, will continue to increase India’s services exports instead of slowing them down.
What is the new $100k H-1B proclamation?
US President Donald Trump recently announced major changes to the H-1B visa programme: a $100,000 one-time fee for new visas and a wage-based selection process. Under the new rules, higher-skilled and higher-paid applicants will be mostly considered in the selection process.
What does the report indicate?
“The impact of these new rules, in terms of likely loss of jobs and dependent livelihoods, cannot be discounted, but the effect via remittance is unlikely to breach $5 billion (out of a total of $83 billion),” said the Barclays report.
It also mentioned that countries like Germany and Canada are now attracting more highly-skilled Indian workers, which could lead to a shift in talent movement over time.
While the US remains a key market for India’s IT and related services, the report pointed out that the growth in India’s IT sector has not been mainly driven by US employment, indicating that the H-1B changes won’t have a big impact on India’s overall services exports.
H-1B visa fee could disrupt services exports and remittances
Meanwhile, on Friday India raised concerns about the fees, as it could affect services exports and remittances, areas that have remained stable despite global trade challenges. The finance ministry’s monthly economic report said the immediate impact is manageable, but long-term effects will need careful monitoring, especially as alternative markets are still developing.
The economic report also claimed that this could add to the ongoing trade uncertainties. On inflation, the report stated that it is expected to stay under control. Additionally, recent cuts in consumption taxes may reduce inflation slightly over the next year.