The Donald Trump administration’s announcement of an annual fee of $100,000 on every H-1B visa is a combative shift. For years, politicians in Washington DC have claimed that technology firms import foreign staff while laying off American workers. What has changed now is the severity of deterrence.It is also a striking departure for a country that has been built over a century on the strength of attracting the best minds from across the world. When nations build walls around talent, they weaken the foundations of their own innovation.AdvertisementFor India, the effects will be immediate and sharp. More than seven out of 10 H-1B visas are issued to Indian professionals. That flow has long underpinned India’s IT and IT-enabled services industry, creating revenues and a vital bridge into the innovation economy of the United States. Employers might end up reserving the visa only for their most critical hires. The programme will no longer be an entry route for young engineers or mid-career professionals, who form the bulk of India’s global technology workforce.The White House argues that the measure is necessary to curb what it calls “systemic abuse” of the H-1B programme. President Trump has called the misuse of the visa a “national security threat”. It is framed as the defence of American jobs, yet it will have broader consequences that extend well beyond the US domestic market. We must resist seeing this as an exercise in economic protectionism.The H-1B was created by Congress in 1990 to allow US firms to hire graduates in specialised fields. Each year 65,000 visas are issued, along with 20,000 more for those with advanced degrees from US universities. Indians, particularly in IT, have consistently secured the majority of these. The programme has been more than a mechanism for outsourcing. It has been a key pillar in the economic partnership between India and the US.AdvertisementYet, this announcement is even more striking when set against another executive order signed yesterday. The Trump administration announced a “Gold Card” visa scheme, offering expedited permanent residency to foreigners who can pay one million dollars to the Department of Commerce. Eighty thousand of these are to be made available. The contrast is stark. The message is that intellectual capital will pay a price, while financial capital will buy its way through.The implications for India are serious.First, industry competitiveness will shift. Large firms may absorb the additional cost. Smaller firms and start-ups, which are often the breeding ground of innovation, will struggle. This tilts the balance towards incumbents. For Indian IT firms, the fee threatens the core offshore-onsite delivery model. If US clients refuse to pay higher costs, Indian companies may be forced to expand offshore centres or redirect to other geographies.Second, financial markets and employment will feel the squeeze in the short term. Indian IT majors depend heavily on US business. If margins come under pressure, investors will quickly mark down valuations. Mid-tier firms without geographic diversity may face the sharpest pain. Employers will adjust by tightening payrolls in India. Wage hikes may be restrained, fresher recruitment may be slowed, and discretionary spending may be cut. Given the employment footprint of the sector, the effects will spread to urban consumption, housing, and services.Third, the global services trade order is at risk. Services make up a quarter of global trade, and talent mobility is central to that flow. By raising barriers, Washington risks triggering reciprocal measures elsewhere. The fragile global consensus on open trade in services may erode further.Fourth, America’s own innovation ecosystem is endangered. This steep fee will also hurt American client firms. They rely not only on cost arbitration through dollar pricing but also on access to global skills that are scarce in the domestic market. Limiting that pipeline weakens their ability to deliver competitively priced products and services, and risks slowing innovation inside the very companies the policy claims to protect.Fifth, India faces a complex challenge. The outflow of engineers to the US may slow. This could create a “brain gain” if only India builds the capacity to employ and empower them at home. Yet the country could also lose remittances, knowledge transfer, and the influence of a global diaspora. The opportunity lies in building stronger research bases, supporting hybrid work, and having liveable cities.Finally, there are legal and geopolitical dimensions. US law generally permits visa fees to cover processing costs, not to generate revenue. The US courts may yet be asked to rule on this measure. Even if struck down, the political signal is clear. Immigration is now an instrument of economic nationalism. India must respond strategically. The over-reliance on the US as a customer and a destination for talent must give way to diversification.most readIndia’s services success has rested on scale and delivery excellence. That model created prosperity, yet it also bred complacency towards building research strength and intellectual property. This weakness has been reinforced by capital allocation choices. When tech firms direct vast sums towards share buybacks, instead of deeper investment in emerging technologies like AI, product development, and patents, the signal this sends is unmistakable.India must now prepare for a world where mobility is costlier, access more uncertain, and global talent flows more politicised. The task is to reimagine the IT-enabled services model.The writer is a corporate advisor and author of Family and Dhanda