HIRE Act Is India’s Real Threat Not H-1B Fees: Raghuram Rajan
Rajan flags U.S. HIRE Act as bigger risk to India’s service exports than H-1B visa hikes
HIRE Act Is India’s Real Threat Not H-1B Fees: Raghuram Rajan. Former Reserve Bank of India (RBI) Governor Raghuram Rajan has cautioned that India should pay closer attention to the proposed U.S. HIRE Act, which he believes poses a far graver long-term challenge than the recent hike in H-1B visa fees.
Speaking about the evolving U.S. legislative landscape, Rajan said that while costlier work visas may cause short-term pain for Indian IT firms, the potential tariffs on outsourced services under the HIRE (Help In-sourcing and Repatriating Employment) Act could significantly disrupt India’s service exports and global employment footprint.
BY- Dr. NAMRATA MISHRA TIWARI, CHIEF EDITORhttp://indiainput.com
What Is U.S HIRE Act?
The HIRE (Halting International Relocation of Employment) Bill seeks to discourage U.S. companies from outsourcing work to foreign workers by imposing strict tax penalties. Under the proposed legislation, American firms will face a 25% excise tax on any payments made to foreign individuals or entities.
This tax will substantially increase the outsourcing company’s overall tax burden. Additionally, companies outsourcing work to foreign contractors will lose the ability to deduct these outsourced payment expenses from their taxable income, further elevating their financial obligations.
A Tweet on HIRE Act Trending :
Raghuram Rajan warns US HIRE Act poses bigger risk to India than H-1B visa fee hike
The HIRE Act could extend tariffs beyond goods to include outsourced services, directly hitting India’s information technology and services exports. https://t.co/OoTzt05AUP— Gautam Ghosh (@GautamGhosh) November 4, 2025
“This isn’t about goods but about services,” Rajan stressed, warning that if enacted, the law could undermine India’s dominant position in the global IT and business process outsourcing (BPO) market.
According to Rajan, India has built a world-leading services export ecosystem anchored in its skilled workforce and cost-efficient operations. Any U.S. effort to penalize companies that leverage offshore teams could therefore have a far deeper, lasting impact than a simple increase in visa costs.
A Tweet on HIRE Act Trending :
‘Tariffs Beyond Goods To Services’: Raghuram Rajan Sees US Hire Act As India’s Big Worry
Read more at: https://t.co/g4HJfRvfbZ pic.twitter.com/X9JnDPBgRt
— NDTV Profit (@NDTVProfitIndia) November 3, 2025
“While the rise in H-1B visa fees of up to $100,000 will certainly hurt in the immediate term, tariffs under the HIRE Act could fundamentally alter the economics of service trade,” he warned.
The H-1B program currently underpins a large share of India’s software and consulting workforce in the United States, supporting thousands of professionals annually. Rajan noted that while Indian firms can adjust to higher visa fees by optimizing costs or local hiring, the HIRE Act would challenge the very foundation of cross-border digital service delivery.
A Tweet on HIRE Act Trending :
Indian IT stocks slips 1% as US Senate introduces the HIRE Act, proposing a 25% tax on outsourcing payments.
If passed, the move could hit contracts of TCS, Infosys, Wipro, and HCL Tech, a sector earning 50–60% from exports.
Details👇 pic.twitter.com/LRcBo48AAC
— NDTV Profit (@NDTVProfitIndia) September 8, 2025
If passed, the legislation could prompt U.S.-based clients to reconsider their outsourcing strategies, potentially redirecting projects to domestic providers or automating more tasks internally. This, Rajan warned, could shrink India’s export revenues, threaten job creation within the tech sector, and slow the nation’s progress toward becoming a global digital powerhouse.
Rajan’s comments serve as a timely reminder for policymakers and industry leaders in India to proactively engage with U.S. counterparts, seeking clarity on the bill’s implications and advocating for a balanced framework that preserves mutual economic benefits.
SOURCE :
http://hoover.org/profiles/raghuram-rajan
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