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Trump’s anti-migration push and tax plans may cost India billions
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US proposals to restrict migration and tax foreign money transfers threaten India’s top remittance flow
India may soon face a significant financial hit as former US President Donald Trump pushes for stricter migration controls and plans to tax overseas money transfers. These moves could drastically reduce the flow of remittances from Indians in the US—a key revenue stream for India’s economy, reported timesofindia.indiatimes.com.
With over $120 billion in remittances received last fiscal, India may see a sharp decline if Trump’s proposed 5% tax and tougher immigration policies are implemented.
The Reserve Bank of India (RBI) reports that the US alone accounted for nearly 28% of India’s total remittances in FY24—about $32 billion of the $118.7 billion received. Indian workers in developed countries, especially the US, play a crucial role in this financial pipeline, which fuels rural economies and contributes significantly to the national income.
Migration from India to developed economies is on the rise, but Trump’s return could reverse that trend. His administration had previously cut legal immigration by 13% between 2016 and 2019, and introduced policies that increased visa wait times and tightened green card eligibility.
This time, Trump’s proposal—the “One Big Beautiful Bill”—introduces a 5% remittance tax for all non-US citizens. This includes H-1B workers, L-1 visa holders, and even green card holders. The tax would apply to all amounts, big or small, and be deducted at the source by transfer services like banks.
A 5% levy on remittances could cost Indian migrants in the US nearly $1.6 billion in additional tax—and India may lose $12-18 billion annually in foreign inflows.
The Global Trade Research Initiative (GTRI) warns this tax could make remittances significantly more expensive, potentially reducing flows by 10–15%. That shortfall could impact India’s forex reserves, rural consumption, and infrastructure development funded by these transfers.
US authorities have also begun imposing visa restrictions on Indian travel agents allegedly linked to illegal immigration. These actions, along with Trump’s anti-immigration rhetoric, paint a grim outlook for Indian migrants and India’s economy.
“The American dream is turning into an American nightmare,” says Prasad Thotakura, president of the Indian American Friendship Council. Meanwhile, political scientist Devesh Kapur notes that Indian migrants, on average, remit one-fifth of their income—underscoring how vital this flow is.
India’s $120 billion remittance cushion—equal to its infrastructure spend—is under threat if US restrictions harden under Trump’s leadership.
The stakes are high. Remittances are the second-largest source of external funding for developing economies. A global annual figure of over $800 billion supports countless families in nations like India, the Philippines, and Pakistan. A similar drop in Pakistan’s remittances previously caused economic instability, IMF intervention, and near-default.
As US-India ties grow stronger in areas like tech and manufacturing, migration policy remains a friction point. Despite high-level Indian leadership in firms like Microsoft, Alphabet, and Adobe, visa bottlenecks and legal limits continue to constrain Indian talent in the US.