Indian Tech Stocks Fall as New U.S. Visa Rules Weigh

By Jason Chau

Indian technology and IT stocks opened the week lower as new U.S. visa rules stoked concern about rising costs that could hurt margins.

The Nifty IT Index, a benchmark for India's tech sector, was down 2.8% on Monday, the first day of trading after U.S. President Trump imposed a $100,000 fee on new H-1B visas that will make hiring foreign talent more expensive.

"This sudden fee hike has sparked confusion and panic among tech companies and international workers, particularly those from India, which account for over 70% of H-1B recipients," Devarsh Vakil, head of prime research at HDFC Securities, wrote in a note.

He expects the change to drive up the cost of deploying Indian professionals to U.S. client sites, making on-site assignments less financially viable.

IT services provider Mphasis was one of the biggest decliners in the afternoon session, last trading down 4.7% on India's National Stock Exchange. LTIMindtree fell 4.5% and lost 3.5%. Larger firms such as Infosys, Wipro and Tata Consultancy Services fared slightly better, with losses of 3.2%, 2.2% and 3.2%, respectively.

Indian IT companies have long relied on the H-1B program to hire skilled workers in the U.S., though that dependence has been decreasing, according to wealth management firm Motilal Oswal.

Still, last year, U.S.-based clients contributed around 57% of the $193 billion revenue pool earned by Indian IT services provider, a report by investment firm Wright Research found.

Even if IT services firms pass on the higher cost of doing business in the U.S. to their clients, Citi analysts reckon they will still take a margin hit.

A potential solution for Indian firms is to set up offshore subsidiaries that handle business operations and human resources, reducing the need for outsourcing, said Kranthi Bathini, equity strategy director at WealthMills Securities.

Having these so-called global capability centers equipped with artificial intelligence and automation can mitigate the visa risks, he said.

Th latest development comes at a time of strained U.S.-India ties, as the two sides negotiate over steep tariffs on Indian goods imposed by the Trump administration. While the domestic strength of India's economy helps shield it from trade shocks, the duties are likely to weigh on growth, analysts say. Visa headwinds could add to that pressure.

The direct impact will be on remittances, Citi strategists said in a note. The U.S. accounts for about 28% of the money workers abroad send back to India, though they think a larger share of the inflows might be coming from Indians with other visas or permits.

Longer term, the challenges could reinforce India's push for self-reliance, analysts say.

The strategists at Citi think policymakers are likely to scale back external dependence, diversify exposure and promote domestic demand and investment.

In a public address on Sunday, Prime Minister Narendra Modi urged Indians to stop using foreign-made products and support local-made goods.

"Whatever is needed by the people of the country, whatever we can make in the country itself, we should make it in the country itself," he said.

Write to Jason Chau at jason.chau@wsj.com

(END) Dow Jones Newswires

September 22, 2025 06:27 ET (10:27 GMT)