Blow to IT sector

Barely had the dust settled on President Donald Trump’s decision to slap a steep 50% tariff on Indian goods when he struck again, this time targeting what many call the crown jewel of India’s economy, the IT services sector. By imposing a prohibitive $100,000 annual fee on H-1B visas, Trump has extended America’s protectionist push from goods to services. For India, which sends the largest share of H-1B workers to the US, this is no ordinary setback; it is a direct assault on the middle-class aspirations that the IT boom has sustained for nearly three decades.

The timing is significant. Only days ago, trade negotiators from Washington and New Delhi were slowly inching towards common ground. Commerce Minister Piyush Goyal is due in the US next week, ostensibly to keep that momentum going. But the going is getting tougher for him: The White House has made clear its intent: Indian exports, whether in goods or services, will not find easy access to American markets unless they bend to Trump’s vision of “America First.”

At one level, the new H-1B fee is meant to make foreign workers unviable for US companies. With an average H-1B salary of $66,000, tacking on an additional $100,000 effectively cripples the program. This will force firms to either hire locally or send more work offshore. For Indian IT majors, it means recalibrating business models long built on the promise of mobility. For Indian families, it means careers cut short.

India’s government has rightly warned of “humanitarian consequences” from the disruption. Yet, New Delhi faces a delicate balancing act. It cannot appear confrontational with Washington at a time when geopolitical alignment is deepening. Nor can it ignore the anxiety of millions of Indian families and businesses dependent on service exports. So, the choice for the union government is tough. But it has to ensure that it doesn’t give in to the unacceptable American demand and also work towards reaching a win-win solution to the ongoing trade stand-off. On the other hand, while protectionism may serve Trump’s electoral calculus. But for the world’s two largest democracies, it is a step backward, not forward.