Moody's warns that US H-1B visa fee changes could slow growth in India's IT exports and affect remittance inflows, though current account deficits are expected to remain manageable.

Moody's Ratings has warned that recent changes to US H-1B visa fees could slow the growth of India's services exports and reduce remittance inflows.

Sweta Patodia, AVP at Moody's Ratings in Singapore, noted that "the new H-1B visa fee will raise operating costs for Indian IT services companies. This adds to a possible 25% tax under the proposed HIRE Act, if US companies outsource to foreign entities."

According to her, 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. Still, current account deficits will stay within manageable levels.

While these measures may slow the growth of India's services exports, Patodia added that "steady global demand for IT services will help offset some of these rising costs. Large IT firms like Tata Consultancy Services (Baa1 stable) and Infosys Limited (Baa1 stable) are better equipped to manage these pressures because of their higher profitability, strong balance sheets and increased focus on local hiring over the last few years."

Also Read: Local hiring, near-shoring to help soften H-1B impact on Indian IT firms, says JPMorgan's Ankur Rudra

The White House clarified that President Donald Trump's $100,000 H-1B fee is a "one-time" payment imposed only on new applicants, with petitions submitted before September 21 unaffected.

Earlier announcements of annual payments for renewals had rattled workers and the tech sector.

Analysts warn that sustained H-1B restrictions could disrupt IT project delivery, compress margins, and challenge traditional offshore delivery models. Indians receive nearly 70% of H-1B visas, underscoring the potential impact.

Emkay Global projects net IT services export growth of 5% for FY26, down from historical trends of around 7% CAGR. The firm expects India's current account deficit to remain manageable at 1.2% of GDP, with net remittances holding steady near $120 billion, while cautioning on downside risks from future policy changes.

Also Read: China's new visa for STEM talent draws attention amid H-1B visa row

The sector responded sharply on Monday, with the Nifty IT index tumbling over 3.5%, underperforming the broader Nifty. Tech Mahindra led losses at 5.8%, while TCS, Infosys, Wipro, HCL Technologies, Mphasis, and Persistent Systems fell up to 5% each.