H-1B fee shock: A classic strategic error that could fuel India’s innovation edge

The recent overhaul of H-1B visa policies by the United States has stirred unease among students, families, and businesses in India. For many, the “American dream” now carries a heavy price tag. But could this moment mark an inflection point for India itself? In a candid conversation with Dataquest, Srividya Kannan, Founder and CEO of Avaali Solutions, reflects on how shifting migration trends and policy shocks might accelerate India’s growth story—through its Global Capability Centres (GCCs), homegrown R&D, and innovation-driven industries.

Srividya Kannan’s perspective underscores a pivotal moment: what appears to be a barrier could, in fact, fuel India’s rise as a destination for innovation, talent, and technology leadership. Excerpts.

Dreams on Hold? Will Indian students and families rethink the US as the Promised Land, and instead look to Canada, Europe or stay back in India?

This policy shift will undoubtedly influence student choices, but it also presents India with an unprecedented opportunity to retain and nurture our best talent. As I've consistently argued, India must create an ecosystem where our brightest minds see greater potential at home than abroad.

The students reconsidering the US path will likely fuel three major trends: Canada and European markets will see increased interest, but more importantly, India's own startup ecosystem and GCC expansion will benefit from talent that might have previously emigrated. With our Karnataka GCC Policy targeting 350,000 new jobs by 2029, and similar initiatives across states, we're creating compelling alternatives to the traditional US migration path.

However, this requires us to address the fundamental issues I've highlighted before—that our domestic companies must invest in R&D, offer competitive compensation, and create innovation-driven roles that match global standards. The question isn't whether students will stay, it's whether we'll create an environment worthy of their talents.

Innovation at Risk: Could the US lose its edge in AI, biotech, and deep tech if immigrant talent becomes too expensive to hire?

The US is making a classic strategic error by conflating cost optimisation with innovation dilution. Having worked extensively with Global Capability Centres, I can attest that Indian talent isn't just cost-effective, it's often driving core innovation in AI, automation, and deep tech domains.

This policy will likely accelerate two trends: First, more US companies will establish GCCs in India to access talent without visa complexities. Second, India's domestic innovation ecosystem will benefit from retained talent that would have otherwise migrated. The irony is that by making it harder to import Indian talent, the US may inadvertently strengthen India's position as a global innovation hub.

For emerging technologies like AI and biotech, proximity to talent often matters more than proximity to markets in the initial innovation phases. The combination of retained AI talent, expanding GCC infrastructure, and our government's innovation investments positions India to capture the very innovation leadership that America's restrictive policies are inadvertently abandoning.

India’s Plan B: Are India’s GCCs, automation bets, and homegrown R&D efforts finally strong enough to reduce dependence on the H-1B pipeline?

This isn't Plan B, this is Plan A finally getting the urgency it deserves. India's GCC ecosystem, automation capabilities, and R&D infrastructure have reached a maturity level where H-1B dependencies represent legacy thinking rather than strategic necessity.

The real opportunity lies in what I call the 'indigenous advantage'—building solutions that understand Indian operational realities while meeting global quality standards. This policy shock should catalyse Indian enterprises to prioritise homegrown technology providers, create domestic consulting ecosystems, and establish India not just as a service provider but as a technology originator.

As I've said before, it's time to shift from 'Made for India' to 'Made in India, Made for the World.' This H-1B reform might just be the catalyst that makes this transition inevitable rather than aspirational.