Indian technology stocks experienced a sharp downturn on Monday, with a key market index tracking the sector falling by over 3%. The sell-off was triggered by a new U.S. policy that imposes a significant fee on H-1B visa applications, rattling investor confidence in a sector heavily reliant on its American business.

The market’s negative reaction followed a new rule from U.S. President Donald Trump, which set a $100,000 levy for each new H-1B visa petition. This fee is a one-time charge and does not apply to existing visa holders or those renewing their visas. While this nuance limits the immediate financial impact, it highlights a more serious, long-term threat to the industry’s business model.

This shift is expected to have a greater impact on mid-tier firms that depend heavily on new visa approvals, while larger players like TCS and Infosys may be better equipped to absorb the higher costs due to their scale.

MphasiS Ltd. fell over 5%, reaching an intraday low of ₹2,817. Persistent Systems Ltd. fell over 4% reaching an intraday low of ₹5,187. Tech Mahindra Ltd., LTIMindtree Ltd. and Coforge Ltd. fell between 3% to 6%. The weakness also extended to large-cap giants, with Infosys Ltd., HCL Technologies Ltd., and Wipro Ltd. experiencing significant losses on the day.

Beyond the immediate stock market reaction, the new visa fee underscores deeper strategic challenges for the industry. To adapt, companies may need to accelerate offshoring, moving more work to be done in India, or increase their local hiring in the U.S. While these strategies could help, both might put pressure on future profit margins.

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