The government on Friday said that the recent US imposition of a one-time fee of $100,000 for all future H-1B visas may cause disruptions, the impact of which —particularly on the growth of future remittances and service trade surpluses— will need close monitoring if the restrictions persist.

The ministry of finance in its monthly economic review for August said that the decision by the US government to impose a fee on new H1B visa-seekers is a reminder of the risks of trade uncertainties affecting the hitherto unaffected services sector.

“For now, the risks appear manageable, but they are there,” said the ministry.

The report further said the GST rate rationalization will strengthen domestic demand and cushion the economy against global uncertainties, the finance ministry said in its monthly economic report on Friday. The move, which lowers the tax burden on consumers, is expected to spur consumption, improve demand visibility for firms, and encourage fresh investments in capacity expansion, the report said.

“Rationalising GST rates at this juncture will not only support consumption but also help firms plan capacity expansions with greater confidence,” said the report, adding that the reforms will provide a buffer against the adverse impact of tariffs and trade-related headwinds.

The report further underscored that despite challenges on the external front, India’s trade position has held steady. “Strong service exports and remittance inflows have helped offset a widening merchandise trade deficit, while foreign direct investment continues to flow in, reaffirming India’s appeal as a destination for global capital,” it said.

[Article by Dipak Mondal of The New Indian Express]