Given that the average annual salary of an H-1B visa holder in the US is $66,000, the $100,000-annual fee announced by US President Donald Trump cripples a programme that most benefits the Indian diaspora. Significantly, it marks the first expansion of America’s protectionist stance from goods to the services sector.The visa move, just like the additional 25 per cent tariffs over Russian oil imports and the withdrawal of sanctions waiver granted to Chabahar port in Iran, largely impacts India.This comes barely days after a US team, led by Assistant US Trade Representative (USTR) for South and Central Asia Brendan Lynch, visited New Delhi, when India-US trade deal negotiations seemed to be slowly inching back towards the road to normalcy. More importantly, the visa proclamation is days before Commerce Minister Piyush Goyal is expected to visit the US next week.The visa order casts a shadow on these negotiations as India typically seeks better access to services-led developed countries under Mode 4. Under the General Agreement on Trade in Services (GATS), Mode 4 describes the supply of services through the movement of natural persons (individuals) from one World Trade Organisation’s (WTO) member country to another. Mode 4 was also a key ask during negotiations for a deal with the UK, but anti-immigration protests and Brexit resulted in little access for Indian IT workers in the UK under the trade deal.Trade deal negotiations with the US are already at a delicate stage as Indian labour-intensive sectors such as the textile, footwear and marine sectors have begun bearing the brunt of steep US tariffs.While government officials have said that liquidity measures for exporters are being worked on, traders said that a longer delay would mean getting replaced in the US market, which could benefit competitors such as Vietnam, Bangladesh and China, among others, who are facing lower tariffs.Explaining the move, US Commerce Secretary Howard Lutnick said, “If you’re going to train somebody, you’re going to train one of the recent graduates from one of the great universities across our land, train Americans…Stop bringing in people to take our jobs. That’s the policy here. And all of the big companies are on board. We’ve spoken to them about it.”Story continues below this adThe White House, in its notification, said that “abuses” of the H-1B programme present a “national security threat” by discouraging Americans from pursuing careers in science and technology, thereby risking American leadership in these fields.The National Association of Software and Service Companies (NASSCOM) said that adjustments of this nature can potentially have ripple effects on America’s innovation ecosystem and the wider job economy.“This is a bit of a blow to the trade negotiations as the H-1B visa issue could be used by US to put pressure on India to agree to some defence or non-trade issues. On our part, we have to reduce dependence on the US market and look at diversifying services exports through a clear strategy and vision document,” said Arpita Mukherjee, Professor at the Indian Council for Research on International Economic Relations (ICRIER).With the Trump administration beginning to impose fresh restrictions on the services sector, experts said that India’s IT industry could feel the brunt next, and this could impact the second middle-class revolution.Story continues below this adHead of the Delhi-based Centre for WTO Studies, Pritam Banerjee, in a seminar Friday, said that due to offshoring, middle-level jobs in the US and EU disappeared in the period from 2000 to 2010. “Our ability to drive the second middle-class revolution will depend on the extent to which we can pre-empt and deal with the huge backlash that is coming in services,” Banerjee said. “We need to pre-empt the protectionism that is coming in services, especially in Mode 1, because that’s the fastest growing component of services trade in the world,” he added.Mode 1, within the WTO framework, refers to “cross-border supply” of services, where a service is provided from one country to another without the physical presence of the service provider or the recipient in the other country.India’s services sector continues to be a significant contributor to growth, accounting for about 55 per cent of the total size of the economy in FY24, as per the Economic Survey. The US is the largest importer of India’s service sector exports.“It will also impact Indian nationals who are on H-1B visas working for global and Indian companies. India’s technology services companies will also be impacted as business continuity will be disrupted for onshore projects, which may require adjustments. Companies will work closely with clients to adapt and manage transitions,” NASSCOM said in its statement. The association said that India and India-centric companies have been steadily reducing their reliance on these visas through increased local hiring in recent years.Story continues below this adThe contribution of the services sector to overall growth has also increased significantly in the last decade, and globally, India’s services sector witnessed real growth of more than 6 per cent, with services exports constituting 4.4 per cent of the world’s commercial services exports.