In a possible severe blow to the India’s tech industry, the US has reportedly been considering capping H-1B visas for Indian nationals at 10 or 15 percent because New Delhi wants its companies store data only in the country.

With US-India trade row over tax hikes and market access gaining momentum, Washington reportedly mulls hitting the Asian country’s sore spot, limiting the number of non-immigrant temporary visas for its citizens, Reuters reported, citing two Indian officials briefed on the US authorities’ plans. The officials said that the measure is a blowback to India’s forcing all foreign companies to store customer data “only in India.”

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The H-1B visas allows US companies high-tech economy sectors grappling with shortages of skilled workers to hire foreign specialists with graduate level degree in finance, IT, accounting, medicine, engineering, science, mathematics and other fields.

Visas might be granted at the request of the US employer for up to 6 years.

For years, India has topped the chart of the countries with the most recipients of the H-1B visas, accounting for roughly 70 of all permits issued within the program, with China lagging far behind. From 2007 to 2017, over 2 million Indians benefited from the program and, at the same time, almost 300,000 Chinese.

While there have not been any official announcement from the US or Indian authorities yet, one of the Indian officials, who spoke to Reuters, said that India’s Ministry of External Affairs has sounded alarm, seeking an “urgent response” from government officials on the potential implications of the move.

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A US source, however, noted that the proposed visa restrictions are not targeting India specifically and would apply to all countries enforcing data localization laws. He noted that proposal to cap visas at 15 percent for those countries who refuse to budge in on the issue so far has been subject of internal deliberation in the US government.

The report comes ahead of upcoming visit by US Secretary of State Mike Pompeo to New Delhi later this month. The Indian capital is the first stop on the US top diplomat’s Asian trip that is scheduled to take place between June 24 and 30.

Apart from the reported visa restrictions, the meeting between Pompeo and newly-reelected Indian PM Narendra Modi will be overshadowed by a recent flare-up in a lingering trade spat. Last week, India slapped retaliatory tariffs on 28 US goods, including on iron, steel and food products, in response to US President Donald Trump’s annulling India’s trade benefits earlier this month.

The trade dispute dates back to at least last March when the US imposed 25 per cent import duty on steel and 10 per cent tariffs on aluminum products from India, causing India, the biggest exporter of these items to the US, massive losses to the tune $240 million

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