India’s CAD to stay manageable despite these changes

The new $100,000 fee imposed by the US government on H-1B visa can slow the growth of India's services exports and reduce remittances to the country, Moody's Ratings said Monday. However, India's current account deficit is still likely to remain manageable, it added.

The US government Friday introduced a one-time fee of $100,000 for a new H-1B visa, which allows companies to hire foreign workers temporarily in the US on a non-immigrant basis in specialty occupations. "While these US policy changes may slow the growth of India's services exports, fewer skilled workers going to the US could also reduce remittance inflows," Moody's said. "Still, current account deficits will stay within manageable levels," the rating agency said in a note. 

India's services exports rose 10% on year to $33.74 billion in July while the current account deficit was 0.6% of GDP in 2024-25 (Apr-Mar). India is the top recipient of remittances in the world and received inward remittances of $137.7 billion in 2024.  The new visa fee can limit opportunities for Indian workers in the US. Indian technology and consulting firms such as Infosys, Wipro, and Tata Consultancy Services have used the programme to send Indian engineers, developers, consultants for projects in the US. 

"The new H-1B visa fee will raise operating costs for Indian IT (information technology) services companies," Moody's said. "However, steady global demand for IT services will help offset some of these rising costs."

IT exports growth to slow below 4%:  Emkay 

Growth in India's IT services exports could slow to below 4 per cent due to fresh risks from the sharp hike in H-1B visa fees, according to a report by Emkay.

The report noted that it had earlier estimated 5 per cent growth in FY26 and a 7 per cent CAGR over the next five years.

It stated, "Indian IT/software gross/net exports stood USD 181bn/160bn in FY25 and we had assumed 5 per cent growth in net IT services exports for FY26E, with a 7 per cent CAGR growth for next 5 yrs. This could reduce to sub-4 per cent depending on sustained H1B visa-led risks and GCC evolution".

India's IT and software exports stood at USD 181 billion gross and USD 160 billion net in FY25. Global capability centres (GCCs) already contribute more than USD 65 billion in gross exports.

The report noted that GCC evolution and adoption of new growth models by IT firms will be key in shaping the sector's outlook.

As per experts the near-term impact on revenues and margins may remain limited. However, if the higher fees sustain, it could disturb traditional export models, ANI reported.