US H-1B Visa Fee Hike Sparks Widespread Concern for Indian IT Sector
The US government's decision to impose a steep $100,000 annual fee on H-1B visa applications has sent ripples of concern across India's technology sector and among Indian professionals. While initial confusion arose, the White House has clarified that this substantial fee applies only to new H-1B petitions and not to existing visa holders or renewals, offering some relief to those already in the US.
Despite the clarification, India's Ministry of External Affairs (MEA) has expressed that the move could have "humanitarian consequences" by potentially disrupting families and long-term career planning for skilled workers. The National Association of Software and Service Companies (Nasscom), India's premier IT industry body, highlighted that the abrupt rollout and the one-day deadline for implementation caused considerable uncertainty for businesses and professionals. Nasscom warned that the new fee could disrupt global operations of Indian technology services companies and impact the thousands of skilled Indian nationals, who constitute the largest group of H-1B visa holders (71%), working onshore in the US. Indian IT majors like TCS, Infosys, and Wipro, heavily reliant on H-1B visas, could face significant cost implications. The Indian government is actively studying the full implications of this policy and has instructed its embassies to provide assistance to affected nationals.
GST Rate Cuts Come into Effect, Aiming to Boost Festive Consumption
In a significant move to stimulate economic growth and consumer demand, new Goods and Services Tax (GST) rates became effective from September 22, coinciding with the start of the Navratri festival. These revised rates are designed to make a wide range of essential and consumer goods more affordable, with 99% of products previously in the 12% slab now moving to a lower 5% slab.
Items such as butter, cheese, confectionery, biscuits, ice cream, soaps, toothpaste, and shampoo will see price reductions. Additionally, appliances like air conditioners and dishwashers, and even cars from manufacturers like Maruti Suzuki, are expected to become cheaper, with price cuts reaching up to ā¹4,500 for ACs and ā¹8,000 for dishwashers. Dairy giant Amul has already announced price reductions across over 700 product packs, including ghee and butter, to pass on the GST benefits directly to consumers. The government anticipates that these cuts will increase disposable income for households, thereby fueling demand across various sectors and curbing illicit trade that might have thrived under higher rates. However, a report by Systematix Research cautions that the revenue loss from these GST cuts could be higher than government estimates, potentially impacting capital expenditure and banking sector credit demand.
Piyush Goyal Visits US for Accelerated Trade Deal Talks
India's Commerce and Industry Minister, Piyush Goyal, is currently in the United States to advance discussions for an early and mutually beneficial bilateral trade agreement. This visit follows "positive discussions" held last week between trade negotiators from both nations. The talks aim to strengthen bilateral trade, investment, and economic cooperation across key sectors.
The negotiations come in the wake of the US imposing punitive tariffs on Indian imports, partly in response to India's purchases of Russian oil. While progress has been made, India's steadfast position on not opening its farm and dairy markets to US companies remains a contentious point in the ongoing discussions. The delegation, led by Minister Goyal, is committed to achieving an early conclusion to the long-pending trade deal.
Indian Stock Market Performance
On September 19, the Indian stock markets experienced a slight downturn, with the S&P BSE Sensex falling by 0.5% to 82,626 points, and the NSE Nifty 50 dropping 0.4% to 25,327 points. Companies in the tech and financial sectors were among those that saw declines. Despite this recent dip, the Sensex has shown resilience, climbing 0.94% over the past month. Market sentiment has been influenced by a combination of factors, including optimism surrounding potential US Federal Reserve rate cuts and ongoing US-India trade talks.