Employees at a firm in Bangalore
Employees at a company in Bangalore [Representation Image]Reuters

Doubling of H-1B visa fee by the US is expected to cost Indian IT companies nearly $400 million. Domestic IT companies are among the top recipients of such visas issued by the US government.

The US government has increased the fee to $4,000 for H-1B visas and $4,500 for L-1 visas. These work permit visas allow companies to hire highly skilled workers from other countries when there is non-availability of such workers in the US.

The Indian IT sector did not expect such a steep hike in visa fee, though it was prepared for an increase.

"It's ironical that countries which have been trying to tell us that you should open up your economy and be more open to trade and investment are now pulling down the shutters in their countries in the areas which matter to us," an analyst with a Mumbai-based brokerage told ET.

IT companies are the major users of the visas and doubling of the fee will weigh on their margins.

"They've doubled the fee, so that impact is going to be significant even if there are other margin levers to pull. The total impact we will only be able to see next year, when the new batch of filings are made," said the analyst.

Rise in visa costs will hit the service-based IT companies the most, while it will also affect product development companies.

"With the rupee also trading weak against the dollar, this hike would be even steeper for the Indian IT sector and it would adversely affect the revenues of the sector. We would certainly feel the impact of this hike on our bottom line," said Diwakar Nigam, CEO & MD of Newgen Software.

Prime Minister Narendra Modi has already spoken about the concerns of the Indian IT industry with US President Obama on the fee hike for H-1B and L-1 visas, the Press Information Bureau said on Wednesday.

With the US heading for Presidential elections next year, the H-1B visa issue has grabbed the attention of the lawmakers in the country.

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