Indian IT stocks crash after H-1B fee hike: Worth buying?
What's the story
Indian IT stocks witnessed a major downturn today after US President Donald Trump signed an executive order to raise the H-1B visa application fee to $100,000 per person for new applications. The Nifty IT index fell over 3% in early trade, dragging benchmark indices lower. Tech Mahindra was the biggest loser with shares plunging nearly 6%.
Market impact
Mid-tier firms hit harder
Mid-tier firms such as Persistent Systems, LTIMindtree, and Mphasis witnessed a fall of over 5% each. The Nifty IT index's constituents were all trading in the red by mid-morning. Even large-cap heavyweights like TCS, Infosys, Wipro, and HCLTech weren't spared from the market's reaction to Trump's visa policy. This has raised concerns about rising costs and squeezed margins for an industry already grappling with global demand slowdown and weak earnings.
Economic shift
New $100,000 levy on H-1B petitions
The new $100,000 levy will be imposed on new H-1B petitions filed by companies seeking to deploy skilled foreign workers. This changes the economics of placing talent in the US, which is India's biggest market for IT services. The cost advantage of sending Indian employees overseas instead of hiring locally will reduce significantly under this rule.
Profitability concerns
Large players may absorb costs, but mid-tier firms will struggle
While large players like TCS, Infosys, and Wipro may absorb the higher costs due to their scale and diversified client bases, mid-tier firms that rely more on fresh H-1B approvals will find it tougher. The visa fee hike also highlights deeper structural challenges for Indian IT. Companies might ramp up offshoring to India or increase local hiring in the US but both strategies could affect profitability.
Stock performance
IT stocks have struggled in 2025
Year-to-date, IT stocks have had a tough run with TCS down 23%, Infosys down 18%, and Wipro losing nearly 15%. The latest US policy shift could derail any nascent recovery. Experts suggest staying nimble, avoiding panic, and reassessing exposure to this sector facing renewed headwinds. The Trump administration's visa bombshell has put India's IT giants on the defensive once again.