The road West is narrowing to a toll lane

New Delhi should stop treating skilled mobility as America’s internal affair and put it on the table as a trade issue

Indian nationals took 71% of all H-1B approvals in fiscal 2024, some 2,83,397 of them. The industry those workers feed is worth roughly $282.6 billion, with exports of about $224.4 billion, and the US alone buys more than half of India’s software services exports — around $117 billion a year. Reprice the door to that market and the shock lands squarely in Bengaluru, Pune and Hyderabad.

Two moves out of Washington this week have changed the arithmetic for India’s software industry and the second one may hurt more than the first. On August 31, the US Department of Homeland Security (DHS) proposed a rule that would charge $103,265 for every H-1B petition, subject to the annual cap of 85,000 visas, including the 20,000 set aside for holders of US master’s degrees.

A few days earlier, the DHS had quietly revived a plan, now sitting on its 2026 regulatory agenda, to end work authorization for certain spouses of H-1B holders. Neither is law yet. But the intent behind both is hard to miss.

Let us consider the fee first. H-1B visas used to cost somewhere between $2,000 and $5,000. Jumping to six figures isn’t a price increase; it’s a barrier dressed up as a filing fee. The DHS says the rule would raise about $8.8 billion a year, but that figure assumes 85,000 employers keep paying. They probably won’t. When the administration tried a similar $1,00,000 charge earlier, filings reportedly fell by nearly 90% and the government actually lost $28 million in revenue. Its own lawyers told a court the fee was “arguably prohibitive” and did not raise money.

That version was struck down by a federal judge in June last. The DHS claims the new one rests on firmer legal ground, but it still has to survive a 30-day comment period and, almost certainly, another lawsuit.

For India, the exposure is enormous. Indian nationals took 71% of all H-1B approvals in fiscal 2024, some 2,83,397 of them. The industry those workers feed is worth roughly $282.6 billion, with exports of about $224.4 billion, and the US alone buys more than half of India’s software services exports — around $117 billion a year. Reprice the door to that market and the shock lands squarely in Bengaluru, Pune and Hyderabad.

The spousal change is quieter, but cuts deeper because it targets whether families choose to go at all. The DHS wants to reverse a 2015 rule that let certain H-4 spouses, those whose H-1B partner is already deep in the green card process, apply for a work permit. It’s worth being precise here: no formal rule has been published, the timing is listed as undetermined and existing permits stay valid for now. This is a stated intention, not a done deal.

But the drift is clear, and one related change has already taken effect. Last October, the DHS scrapped the automatic 540-day extension that used to protect spouses waiting on a renewal, which means a slow processing queue can now push someone out of a job they already hold.

Indians are essentially the entire group affected. A Congressional Research Service study found that 93% of the 1,26,853 H-4 work permits approved through late 2017 went to spouses from India. The reason is a structural trap: because of a 7% per-country cap on green cards, Indians wait longer than anyone, often decades.

The H-4 permit was the pressure valve that let a spouse, usually a woman with her own degree and career, work through that wait. Take it away and a two-income household becomes one, and the whole proposition of moving to America gets meaningfully worse.

One caveat cushions the big names. India’s marquee firms sponsor fewer visas than people assume. Nasscom argues that all Indian IT companies together account for under 20% of approved H-1B visas, having already shifted towards hiring Americans and delivering work from home.

The real casualties are the mid-tier staffing shops and the individual engineer whose spouse can no longer earn. Add a lottery now tilted towards higher salaries and a proposed end to the grace period for laid-off workers and the pattern is obvious. The road West is narrowing to a toll lane.

So what should India do? Two things.
Firstly, lean harder into the Global Capability Centre (GCC) model. Instead of shipping engineers and their families abroad, India can be where the work happens. It already holds about 58% of the global sourcing market, and the GCCs are among the fastest-growing parts of its tech economy. Steady tax rules, faster clearances and incentives to build in tier-2 cities could turn visa friction into domestic jobs. A career built in Hyderabad needs no permit from anyone.

And secondly, spread the risk. Leaning on one market that buys more than half your exports is the vulnerability. Europe already takes roughly a third of India’s software services exports and the Gulf, Japan and Southeast Asia are barely tapped. New Delhi should also stop treating skilled mobility as America’s internal affair and put it on the table as a trade issue, spouses’ work rights included.

None of this is settled law. But the message behind it is settled enough. The country that built a $224-billion export machine on easy access to the American office now has to build one that doesn’t depend on it.
(Subimal Bhattacharjee is a Cyber Security Expert)