Visa Hurdles Create Headwinds for US Tech Hirings at Indian-Founded AI Startups
Indian-founded artificial intelligence (AI) startups aiming to establish and expand their presence in the United States are encountering significant obstacles due to increasingly complex and stringent visa regulations. These hurdles are impacting their ability to attract and retain top tech talent, hindering their growth and potentially weakening America's competitive edge in the global AI race.
The tightening of visa rules, particularly under the Trump administration, has created a challenging environment for these startups. A new $100,000 H-1B visa fee for fresh applications, implemented in September 2025, adds another layer of financial burden, even though it does not affect workers switching jobs. This fee, coupled with general anxieties surrounding potential future changes in visa policies and job security, is making prospective employees hesitant to join smaller companies.
Aravind Jayendran, the co-founder of LatentForce, an AI startup, highlighted the critical need for a US presence for client meetings. However, securing a B1/B2 visa is proving difficult, with appointment wait times in India stretching from three-and-a-half to nine months. This delay significantly impacts startups that rely on in-person interactions to secure deals. "As a startup, we are already facing multiple challenges and this is yet another that we need to deal with now," Jayendran stated.
Another challenge is the rising rejection rates for O-1 visas, a special category visa for individuals with extraordinary abilities. Siddhant Mohan, the founder of Qodex, an API testing and security firm, is seeking an O-1 visa but has observed an increase in rejection rates. Data from U.S. Citizenship and Immigration Services indicates that the denial rate for O-1 applications increased from 4.5% in FY23 to 5.8% in FY24. While O-1 visa approvals for Indian applicants rose to 1,375 in FY24 from 210 in 2018, the increased denial rate creates uncertainty for startup founders.
These visa-related challenges are forcing Indian AI startups to reconsider their hiring and growth strategies in the US. Some are focusing on hiring US citizens and green card holders to avoid visa complexities. Others are increasing recruitment in their India offices, while still hiring local US talent for business development roles. Himanshu Tyagi, cofounder of Sentient Labs, indicated that they are primarily hiring PhD-level researchers in the U.S., but are concerned about potential visa issues for new researchers.
The potential elimination of the Optional Practical Training (OPT) program, which allows international students to work in the US after graduation, could further complicate the talent pipeline for these startups.
The US remains a primary growth destination for many Indian AI startups, offering access to deep capital pools, a large customer base, and a hub of innovation. Several Indian entrepreneurs from companies like Composio, Smallest.ai, and Atomicwork have already relocated to the US to tap into this ecosystem. However, these visa hurdles could force founders to rethink their expansion plans and consider more welcoming markets. Some are of the view that the impact may be limited. Sandeep Kohli, cofounder of Divyam.ai, said that they are willing to pay for the right skills and sees the move as an advantage, as it could bring quality talent back to India.
The situation highlights the delicate balance between the US's need for top global talent and its protectionist policies. As countries like Canada and Japan actively target high-skilled immigrants with streamlined work permits and other incentives, the US risks losing its competitive advantage in the global AI landscape.
