$150 billion Indian IT sector uses H1-B Visas to fly engineers and developers to service clients.

The United States' plans to cap H1-B work visas, used by Indian IT firms to send employees there, would imply a "further crunch" for businesses to access skilled workforce, industry lobby group Nasscom said on Thursday.

The United States told India it is considering caps on H-1B visas for nations that force foreign companies to store data locally days ahead of US Secretary of State Mike Pompeo's visit to New Delhi, Reuters reported on Wednesday citing three sources with knowledge of the matter.

The warning comes as trade tensions between the United States and India have resulted in tit-for-tat tariff actions in recent weeks. From Sunday, India imposed higher tariffs on some US goods, days after Washington withdrew a key trade privilege for New Delhi.

The $150 billion Indian IT sector uses the work visas to fly engineers and developers to service clients, including software giants such as Microsoft Corp, Alphabet Inc and Facebook Inc in the US, their biggest market.

If Washington made it more difficult to hire advanced tech workers, it would only weaken the US companies that depend on them to help fill their skill gaps and put jobs at risk, Nasscom said in an emailed statement.

However, the lobby group, which counts Wipro Ltd Chairman Rishad Premji and Infosys Ltd Chief Operating Officer U.B. Pravin Rao among its governing members, said it awaited clarity from official sources on the matter.

"The American companies themselves need Indian talent, so if there is a cap on these visas, this will impact US companies also and hurt their business interests," said Sudheer Guntupalli, an analyst with Ambit Capital in Mumbai.

"Clearly this seems to be a retaliatory measure from the US government."

Shares of sector heavyweights Infosys fell as much as 2.13 per cent on Thursday, Tata Consultancy Services Ltd (TCS) lost 2.12 per cent and Wipro fell over 3 per cent in early trade, following the report, before recouping losses later in the day.

Infosys and Wipro did not comment on the matter, while TCS did not immediately respond to requests for their views on the report.