New Delhi: Growth in India’s IT services exports could slow to below 4 per cent due to fresh risks from the sharp hike in H-1B visa fees, according to a report by Emkay.
The report noted that it had earlier estimated 5 per cent growth in FY26 and a 7 per cent CAGR over the next five years. It stated, “Indian IT/software gross/net exports stood at USD 181 billion/160 billion in FY25, and we had assumed 5 per cent growth in net IT services exports for FY26E, with a 7 per cent CAGR growth for the next five years. This could reduce to sub-4 per cent depending on sustained H-1B visa-led risks and GCC evolution.”
India’s IT and software exports stood at USD 181 billion gross and USD 160 billion net in FY25. Global Capability Centres (GCCs) already contribute more than USD 65 billion in gross exports. The report noted that GCC evolution and adoption of new growth models by IT firms will be key in shaping the sector’s outlook.
Experts believe the near-term impact on revenues and margins may remain limited. However, if the higher fees sustain, it could disturb traditional export models.
Madhavi Arora, Chief Economist at Emkay Global, stated, “Near-term impact may be limited on IT revenue and margins. However, if sustained, it could disturb Indian IT exports, companies’ traditional models, pressure project margins, disrupt Indian IT supply chains, and on-site projects. That said, a shift in delivery and export models over time towards offshoring could also provide IT export offsets.”
The U.S. recently raised H-1B visa fees to USD 100,000 for new visas, up from the previous range of USD 1,500 to 4,000. This change does not affect existing visa holders or renewals but could weigh heavily on Indian IT companies dependent on new on-site visas.
Nilesh Shah, Managing Director of Kotak Mahindra AMC, stated, “US restrictions on H-1B visas will hurt Indians more than Indian IT services companies. We have to create an ecosystem in India so that our talent doesn’t have to go abroad. Handcuffing skilled workers and abruptly changing H-1B visa policies will have adverse effects on the US economy over time.”
Over time, companies may try to offset the pressure by shifting more delivery offshore, though risks could rise further if the proposed HIRE Act is passed.
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