The H-1B Visa fallout: When populism meets partnership

Amid an ongoing row over tariffs between the US and India, the White House on 19 September announced steep new restrictions and fees on H-1B visas. The H-1B visa, according to the Trump administration, has been “deliberately exploited to replace, rather than supplement, American workers with lower-paid, lower-skilled labour” and also poses a “national security threat.”

The administration has claimed that the high number of relatively low-wage workers in computer and math programs, especially in IT firms, has undercut the integrity of the H-1B visa program. By hiring “STEM labour” from foreign countries, the IT industry, especially, has threatened American workers’ wages and labor opportunities — particularly at the entry level — in industries where such low-paid H-1B workers are concentrated. In furtherance of this order, the Trump administration levied a $100,000 annual fee for H-1B-sponsored positions in various job sectors.

This decision is not only a protective immigration policy for America but also carries ample economic and strategic signalling. The order restricts entry for certain categories of foreign skilled workers and will operate for at least the coming year. This decision by the US will be consequential for India, which has the largest single source of H-1B beneficiaries employed mostly in Big Tech companies.

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The Indian government has warned of the “humanitarian consequences” that this sudden decision would cause — especially among the thousands of Indian professionals and their families who fear they will be unable to return to the US. The consequences are immediate and visceral: disrupted families, massive cost shocks for employers, and deep uncertainty for thousands of professionals and students who have long represented a living bridge between the two democracies.

Economically, this decision comes at the cost of stability in global supply chains and R&D networks that companies are trying to rebuild after the pandemic disruptions. The “ripple effects” could be massive across operations and innovation pipelines, especially for the IT sector that relies on the mobility of engineers to maintain overseas operations and ensure timely deliveries for clients.

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The distress is equally shared by American tech giants who have long relied on open skills immigration. Now, if employers have to bear the higher transaction costs of H-1Bs, they face three options — each with economic and political impacts: first, absorb the fees; second, reshape hiring processes to favour local US labour; and third, restructure teams toward offshoring.

Politically, Washington’s H-1B decision aligns with Trump’s MAGA project and his promise to “protect American jobs,” but it overlooks the more complex, longer-term calculus of strategic partnerships. In the short term, this decision appeals to domestic nationalist emotions, but foreign policy is rarely immune to domestic decisions.

As for India, which has long pursued a multi-vector diplomacy to preserve strategic autonomy, the H-1B decision complicates a relationship built on economic interests, defence tech cooperation, and a large diaspora that functions as a soft-power asset. New Delhi has acknowledged the possible disruption that President Trump’s decision will cause and hopes to find a possible solution. However, India’s approach has made it clear that its friendship with the US cannot come at the cost of its sovereign decision-making.

On the larger geopolitical chessboard, the decision plays out differently. In recent years, a series of high-profile summits, bilateral engagements, and tariff wars have drawn Beijing and Moscow closer — and with the recent SCO summit, speculations of New Delhi becoming a relevant part of this friendship have gained traction. While India has always maintained an independent understanding of its relations with both capitals, it has been practical enough to preserve its strategic ties. For New Delhi, Russia remains an indispensable defence partner, and China an unavoidable neighbour whose economic heft cannot be ignored.

Now, the H-1B shock, coupled with frictions over tariffs and trade with the US, nudges India to hedge more visibly with China and Russia. This hedging also means that one can expect India to deepen and diversify its technical and trade arrangements with partners willing to tolerate strategic distance from Washington. In this scenario, Russia — with its defence and Eurasian energy complex — and China — with its economic prowess — become India’s natural choices, of course with mutual benefits.

Practically speaking, as a blessing in disguise, India has a chance to accelerate its efforts to onshore and skill up domestically, actively using the shock as a spur for industrial policy and R&D reforms. This is slow but sensible and long-term planning. It also gives New Delhi a chance to intensify its diplomatic balancing in three ways. First, India could tactfully use public rebuke of the decision to strengthen its influence on the diaspora in the US; second, by reassuring Washington that the core security concerns and areas of cooperation vis-à-vis China remain intertwined for both countries in the Indo-Pacific and South Asia.

Lastly, in industries where the US depends on global talent (AI, cloud engineering, biotech), barriers on H-1B visas will easily push talent and parts of the innovation economy to friendlier jurisdictions like Canada, the EU, Australia, and, paradoxically, back to India or China. This diminishes the US’s comparative advantage over time and gives India diplomatic and strategic leverage.

As for the United States, the calculus goes beyond domestic policy changes. Strategic relations with India have been one of its few durable, bipartisan projects in Asia policy since the early 2000s. By suddenly creating chaos for Indian professionals — and eventually for Indian tech and business ecosystems — Washington risks hollowing out its critical asset: people-to-people ties that underpin trust, knowledge transfer, and the informal scaffolding for security cooperation.

The question arises: does this US decision regarding H-1B visas and tariffs translate to a China-Russia alignment against the US?

Not really. New Delhi has always stood by its deep institutional, democratic, and strategic reasons to avoid leaning toward Beijing. Moreover, many experts calling India-China-Russia relations an “axis” miss the mistrust that defines India-China relations in the context of border tensions and Pakistan — and the transactional limits of India–Russia engagements.

Policy shocks like the H-1B action open the scope for non-alignment in practice. India is likely to become more transactional, less solicitous of US positions, and more willing to diversify partnerships to protect its economic sovereignty. In other words: convergence where interests align, distance where they don’t.

Washington needs to contemplate and recalibrate its actions if it values the US-India partnership. Practical steps include targeted exemptions for critical skill pipelines and phased implementation with relief for existing workers. A diplomatic outreach linking immigration policy to strategic objectives must be worked upon as soon as possible. For New Delhi too, this calls for pragmatic resilience — urgent bilateral negotiation to protect families and firms, combined with a solid strategy to strengthen and retain domestic talent ecosystems, coupled with a multilateral push to protect cross-border professional mobility.

The H-1B upheaval is both a mirror and a hinge — reflecting that domestic politics in Washington has the potential to pivot the strategic relationship between two of the world’s most consequential democracies. None of the two countries benefit from a rupture. Still, India could benefit from the multipolar architecture that places it as a transactional actor, hedging its bets among great powers while preserving its autonomy.

Dr Ila Joshi is Assistant Professor, Jaypee Institute of Information Technology, Noida. Views expressed are personal and do not necessarily reflect Firstpost’s editorial stance.