The recent announcement by the Trump administration to impose a $100,000 fee on H-1B visa applications has sparked widespread concern and criticism, with one former Indian diplomat likening the policy's reversal to "rolled back like toothpaste". This statement encapsulates the sentiment of many who view the decision as detrimental to both Indian professionals and the U.S. tech industry.

President Trump's proclamation, signed on Friday, adds a substantial fee to the existing costs associated with H-1B visas, a program vital for attracting highly skilled workers to the United States. The move is seen as a way to prioritize domestic jobs and appeal to Trump's "MAGA" constituency. However, experts and industry leaders have voiced concerns about the potential repercussions.

The H-1B visa is a non-immigrant visa that allows U.S. employers to temporarily employ foreign workers in specialty occupations. These occupations generally require a bachelor's degree or higher in a specific field. The tech industry heavily relies on H-1B visas to fill critical roles, particularly in software development and engineering.

The new fee structure has triggered warnings from major tech companies, including Microsoft, Alphabet (Google), and Amazon, who have advised their H-1B employees to remain in the U.S. or return immediately if they are abroad. This underscores the immediate disruption and uncertainty caused by the policy change.

Former Indian diplomat KP Fabian noted that the policy now targets only new applications, sparing existing visa holders. He suggested that initial fears of family separations led India to raise humanitarian concerns, and the subsequent adjustments reflect pushback from U.S. businesses and a recognition of the policy's downsides.

Several experts have criticized the new H-1B visa rules. Waiel Awwad, a West Asia strategist, views the $100,000 fee as a serious blow to Indian skilled workers and students and criticized the U.S. for pressuring India through visa changes, tariffs, and regional restrictions.

The US Chamber of Commerce has also expressed concern about the impact on employees, their families, and employers. The organization is working with the administration to understand the full implications and find the best path forward.

The impact of this fee hike is expected to disproportionately affect Indian professionals, who constitute a significant portion of H-1B visa holders. Veena Sikri, another former Indian diplomat, highlighted that over 70% of H-1B visa holders are from India. She suggested that India should view this challenge as an opportunity to strengthen its domestic expertise and create competitive jobs.

Some experts believe the U.S. may be undervaluing Indian talent and could realize the consequences too late. The increased costs for both Indian IT firms and U.S. companies sponsoring H-1B workers could lead to reduced access for smaller IT companies.

The proclamation directs the Department of Labor (DOL) to raise prevailing wage levels, further increasing costs for employers. These changes aim to crack down on companies, particularly staffing and outsourcing firms, that file multiple applications to flood the lottery system.

The new H-1B fee is likely to face legal challenges. Aaron Reichlin-Melnick, a senior fellow at the American Immigration Council, stated that the president lacks the legal authority to impose such a fee, arguing that Congress has only authorized fees to cover application processing costs.

The situation remains fluid, with potential for further adjustments and legal challenges. The long-term effects on U.S.-India relations and the global tech landscape remain to be seen.