US tells India mulling cap on H-1B to deter data rules

New Delhi

The United States has told India it is considering caps on H-1B work visas for nations that force foreign companies to store data locally, sources said, widening the two nations’ row over tariffs and trade.

The plan to restrict the popular H-1B visa programme, under which skilled foreign workers are brought to the United States each year, comes days ahead of US Secretary of State Mike Pompeo’s visit to New Delhi.

India, which has upset companies such as Mastercard and irked the US government with stringent new rules on data storage, is the largest recipient of these temporary visas, most of them to workers at big Indian technology firms. 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.

Two senior Indian government officials said they were briefed last week on a US government plan to cap H-1B visas issued each year to Indians at between 10 per cent and 15 per cent of the annual quota. There is no current country-specific limit on the 85,000 H-1B work visas granted each year, and an estimated 70 per cent go to Indians.

Both officials said they were told the plan was linked to the global push for “data localisation”, in which a country places restrictions on data as a way to gain better control over it and potentially curb power of international firms.

US firms have lobbied hard against data localisation rules around the world. The move, however, was not solely targeted at India, sources said.

Most affected by any such caps would be India’s more than $150 billion IT sector, including Tata Consultancy Services and Infosys Ltd, which uses H-1B visas to fly engineers and developers to service clients in the US, its biggest market. Major Silicon Valley tech companies also hire workers using the visas.

India last year mandated foreign firms to store their payments data “only in India” for supervision, and New Delhi is working on a broad data protection law that would impose strict rules for local processing of data it considers sensitive.

While governments the world over have been announcing stricter data storage rules to better access data in their jurisdictions, critics say restricting cross-border data flows hurts innovation and raises costs. — Reuters