When the Trump administration announced a one-time $100,000 application fee for new H-1B visas, India’s $283 billion IT services industry reeled. Executives scrambled for clarity. AI startups, in particular, began calculating how this policy shift might alter their growth plans.
Large IT firms worry about costs and delivery models. Startups face a different equation.
Resilience in the Face of Visa Barriers
Contrary to the panic in legacy IT corridors, investors believe AI startups will not be as badly hit.
Abhishek Prasad, managing partner at Cornerstone Ventures, said, “Startups usually don’t target H1B quotas for their US efforts and end up either seeking short-term visas for founders or key team members to visit customers or investors. I don’t see a significant impact on startups scaling in the US market.”
Cash-constrained startups prefer agility over bureaucracy. Instead of relocating engineers, they either hire locally in the US or operate remotely. As some mature, they shift headquarters westward, with hiring dominated by American engineers rather than Indian deputations.
Still, the new fee raises the threshold of entry. Scaling in the US will now demand stronger partnerships and capital reserves, not cross-border transfers.
For some, the moment validates earlier bets. Sangram Raje, cofounder and CTO of Prodigal, said, “Back in Trump’s first term, I was convinced Indian machine learning talent would eventually move back because US immigration policies would tighten. At the time, it wasn’t obvious, but with the new $100,000 H-1B rule in his second term, that thesis has played out.”
Turning Crisis into Opportunity
Others see the fee as a chance for India to reverse brain drain.
Madhav Krishna, CEO and founder of Vahan.ai, said, “I believe the proposed fee could act as a catalyst in strengthening India’s AI talent ecosystem. One of the biggest challenges India has faced is brain drain, where our best engineers and researchers often move abroad in search of opportunities.”
Krishna believes changes in visa structures could encourage more people to stay back and build in India. Some may even return.
“India possesses a unique combination of abundant data, diverse linguistic and cultural contexts, and a vibrant startup ecosystem. Together, these factors create an exceptional environment for AI innovation,” he said.
If top engineers stay, India could accelerate homegrown solutions in employment, healthcare, and education. These could serve domestic needs and scale globally.
Shantanu Gangal, cofounder and CEO of Prodigal, links the policy to shifting career choices. “The fee on H-1B visas makes the traditional pathway of pursuing an MBA or master’s in the US much harder to justify. But for engineers today, especially in AI, the equation looks very different. In this field, the market rewards skills and what you can build over pedigree.”
“Don’t wait for a visa, start building in AI now, and the market will find you wherever you are,” Gangal said.
The Risk of Losing More than Just Coders
For the US, the outcome is complex. The “America First” agenda aims to limit immigration. But the immediate effect could be a chilling of the tech talent pipeline.
Historically, H-1B holders have made outsized contributions to US innovation. They have founded companies, filed patents, and led R&D efforts.
With such high fees, startups and mid-tier firms may avoid sponsoring visas. Top Indian engineers may choose to stay in India or relocate to Europe, the Middle East, or Southeast Asia.
At a time when the US races against China to lead in AI, the risk is not just fewer coders. It could be the loss of an entrepreneurial engine powered by immigrants.
Unlike tariffs in other sectors, the effects of visa fees on innovation are hard to model. AI progress depends on global talent clusters. If the $100,000 fee diverts talent elsewhere, the long-term impact could stretch from startup valuations to national security.
A Global Paradox
The fee may not hurt Indian AI startups immediately. Many already hire locally or remain in India. But the indirect effects are significant. The country could retain more top talent, boosting its AI ecosystem. The US risks slowing its AI momentum by limiting entrepreneurial engineers.
In an effort to protect American jobs, the US may have inadvertently created an opportunity for India to claim a larger share of the AI future.
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