NIFTY IT Crashes: How a $100,000 Visa Fee Could Reshape Indian IT Margins and Valuations

Mumbai | September 22:
Indian IT stocks were at the centre of a storm on Monday as the sector faced its most significant policy shock in years. The US government’s decision to raise the H-1B visa fee from $1,200 to $100,000 (₹88 lakh) triggered panic across Dalal Street, leading to one of the sharpest single-day declines in technology shares this year.
The NIFTY IT index, which captures India’s top technology companies, plunged by nearly 4% intraday, dragging mid-cap IT stocks down with it. The scale of the fall underscored how critical the visa route remains for Indian companies, even though dependency has reduced over the past decade.

Why the Visa Fee Matters

The H-1B visa programme has been a cornerstone of India’s IT success in the United States, its biggest export market. Indian firms account for over 70% of all H-1B approvals, enabling them to deploy skilled employees at client locations in the US. A sudden jump in fees from $1,200 to $100,000 changes the financial equation for these firms overnight.

“This is more than a sentiment shock. The $100,000 visa fee is a structural overhang for the sector, and could weigh on valuations as investors reassess earnings visibility,” said Pritish Thakkar of PL Capital. His assessment reflects the view that what initially appears as a one-off cost increase could have longer-lasting implications for margins, contract pricing and even hiring strategies.

The immediate concern for investors is whether companies can absorb this added expense or whether it will force them to adjust business models, pass on costs to clients, or sacrifice profitability. The uncertainty explains the steep fall in market capitalisation.

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The Margin Impact

While the headline number is striking, the actual impact on margins requires closer analysis. According to Vikram Kasat, Head of Advisory at PL Capital, the new order could reduce sector margins by about 40 basis points by FY27e.

The visa fee will apply to new approvals from March 2026 and will be valid for three years, extendable by another three. This means the cost, while substantial, will effectively be spread over six years. “H-1B dependency has dropped sharply — from 3.4% of headcount in 2016 to 0.7% in 1H CY25 — but new approvals still add around 0.2% annually. We estimate an overall cost of around USD 60 million across our coverage universe. For most companies, this is marginal. But LTIM could see a sharper 130 basis point hit given its higher reliance,” Kasat explained.

For large IT firms such as Infosys, TCS and Wipro, the impact is expected to be manageable given their scale, global delivery models and reduced reliance on H-1B approvals. However, investors may need to factor in slower margin expansion and potential pressure on earnings upgrades in the medium term.

What Investors Should Watch

The timing of the move is critical. Indian IT stocks had begun to stabilise after a difficult year of muted demand, with signs of recovery in deal wins and order books. The visa fee hike throws a fresh challenge into the mix, adding to concerns about global demand softness and pricing pressures.

For investors, the key questions are:

• Can Indian IT firms adjust their onshore-offshore mix without damaging competitiveness?
• Will companies be able to absorb the additional costs, or will they pass them on to clients, risking contract renegotiations?
• How much of the margin pressure is already reflected in current valuations, and where does the sector go from here?

The sector’s resilience will depend on how companies balance these challenges. While the overall margin hit may be modest for most players, the psychological weight of a $100,000 visa fee is significant. It highlights the regulatory risks that remain inherent in Indian IT’s biggest market, reminding investors that valuations are vulnerable to policy shocks abroad.

The H-1B visa fee hike is not just an incremental cost increase — it is a policy shift that could reshape how investors view the sector’s growth prospects. For Dalal Street, today’s crash in the NIFTY IT index may be the start of a longer conversation about margins, valuations and investor sentiment.

With the festive quarter approaching, investors will need to stay selective within the IT pack, focusing on companies with diversified delivery models and lower dependency on visas. For now, the message is clear: regulation has re-entered the conversation, and Indian IT will have to prove its resilience once again.