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The United States has warned India that it may impose caps on H-1B work visas for countries which require that foreign companies store data locally, according to Reuters, citing three sources with knowledge of the matter.
The move comes less than a week after India announced retaliatory tariffs as high as 70% on 28 US products in response to Washington's refusal to exempt Delhi from higher import taxes on steel and aluminum of up to 120%.
According to the report, the plan is linked to the global push for "data localization," which US technology firms have lobbied against around the world.
A Washington-based industry source aware of India-U.S. negotiations also said the United States was deliberating capping the number of H-1B visas in response to global data storage rules. The move, however, was not solely targeted at India, the source said.
“The proposal is that any country that does data localization, then it (H-1B visas) would be limited to about 15% of the quota. It’s being discussed internally in the U.S. government,” the person said. -Reuters
Hardest hit by the proposal would be Silicon Valley tech companies, as well as India's $150 billion+ IT sector such as outsourcing firms Infosys and Tata Consultancy Services, which use H-1B visas to send tech employees to clients in the United States.
Since last year, the Trump administration has been upset that U.S. companies such as Mastercard and Visa suffer due to regulations in several countries that it says are protectionist and increasingly require companies to store more data locally.
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.
In March, the USTR cited India, China, Indonesia and Vietnam's data-flow restrictions as "key barriers to digital trade," while Pompeo said last week at a US-India Business Council event that the Trump administration would push the issue both to help US companies and to secure the digital privacy of consumers.