By Frank F. Islam | September 26, 2025
Introduction
Last Friday, just as Americans were winding down for the weekend, the White House dropped a shock-and-awe measure affecting many leading US businesses. On that day, President Donald Trump signed a proclamation announcing a staggering $100,000 fee on H-1B visas for each employee hired under the program, effective September 21.
This H-1B proclamation could prove extremely problematic for the technology industry in both the United States and India, straining an already delicate relationship between the two nations even further.
Immediate Industry Fallout
The announcement sparked 24 hours of absolute mayhem across the tech world. Microsoft and other major employers urgently advised their H-1B workers abroad to return before the deadline, while instructing those still in the US to avoid international travel.
By Sunday evening, perhaps bowing to immense business pressure and the turmoil unleashed, the White House issued a clarification: the new fee would not apply to current H-1B visa holders or petitions filed before September 21.
This clarification, published as an H-1B FAQ on the White House website, offered some relief to existing visa holders—but it also carried ominous signals about what lies ahead.
Forthcoming Reforms and Wage Rulemaking
The FAQ noted that the administration is preparing further reforms to the H-1B program. Among them, the Department of Labor will launch a rulemaking process to revise and raise prevailing wage levels to “upskill the H-1B program and ensure that it is used to hire only the best of the best temporary foreign workers.”
Prevailing wage levels have long been at the heart of the H-1B debate. Under the current system, employers classify jobs into four wage tiers, with the lowest often set well below the median market rate. Critics argue this framework incentivizes companies to hire foreign workers at entry-level wages for high-skill roles—undercutting US workers and suppressing industry-wide salaries.
Historical Context: The 2020 Wage Rule
This is not the first attempt to recalibrate H-1B wages. Back in 2020, during Trump’s first term, the Department of Labor issued an interim final rule that significantly raised the required wage levels for H-1B and other employment-based visas.
That measure faced immediate backlash from industry groups, universities, and employers who warned that it would make hiring foreign talent prohibitively expensive. Multiple federal courts struck down the rule, citing both procedural flaws and concerns that it exceeded the agency’s authority.
Lottery System Overhaul
The H-1B FAQ also previewed forthcoming rulemaking by the Department of Homeland Security to overhaul the H-1B lottery system. Under the proposed change, priority would be given to higher-paid and higher-skilled applicants, rather than relying on a random lottery draw.
This marks a dramatic shift from the current process and signals an administration intent on reshaping the H-1B program into one that favors elite earners. Such a change could dramatically alter the demographics of future visa cohorts, making it harder for early-career professionals to qualify.
A Predictable Policy Direction
While the timing of the proclamation caught many off guard, the policy direction should not have. For months, rumors swirled among tech insiders and immigration experts about an impending crackdown.
The H-1B visa program has long been a lightning rod in America’s immigration debate. To its critics, it represents a threat to US job security, with accusations that companies exploit the system to import low-wage workers—particularly from India—to replace American employees.
Tighter Immigration Controls
This proclamation is just the latest in a string of restrictive immigration measures. Earlier, the White House tightened F-1 student visa rules, making it more difficult for international students to pursue education in the United States.
That change is significant because many international students eventually transition to H-1B jobs. Together, these moves threaten to choke the talent pipeline that has long supplied American universities and companies with some of the world’s brightest minds.
Impact on India and Bilateral Relations
If it withstands legal challenges, the new policy will hit Indian professionals hardest. Indian nationals currently account for more than 70% of all H-1B recipients, and India’s IT sector relies heavily on H-1B talent to serve US clients.
The timing also worsens diplomatic strain. Coming just weeks after the administration slapped a 50% tariff on Indian goods, the H-1B proclamation represents a second economic blow.
With US companies as its largest clients, India’s IT industry stands to lose heavily—both economically and in terms of morale. The diplomatic fallout is equally troubling: tariffs and visa restrictions together have driven US–India relations to their lowest point in years.
The Self-Inflicted Wound
The new policy is not just a setback for India—it is also a self-inflicted wound for America’s innovation ecosystem. The role of H-1B workers in powering Silicon Valley’s meteoric rise is undeniable. Nearly every major US tech CEO acknowledges that this program has fuelled innovation, growth, and value creation.
There is certainly a need to improve the H-1B framework. But instead of reforming it, imposing a six-figure fee per employee amounts to gutting the system entirely.
Even America’s “Fab Five” tech giants—with trillion-dollar market caps—would balk at paying $100,000 per employee on top of already high compensation costs. The likely outcome? Reduced competitiveness and a surge in outsourcing.
In fact, US companies are already expanding their global capability centers in India, and this policy may only accelerate that trend. Ironically, a measure billed as protecting American jobs may end up exporting more of them.
Conclusion
The H-1B program has long been a golden goose for America—fueling innovation, job creation, and global technological leadership. To cripple it with punitive measures would be self-destructive, harming not just India but the very foundation of the US tech industry.
