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, according to latest reports.
The two countries have been at loggerheads over tariffs and trade and the plan to restrict the popular H-1B visa programme comes just days ahead of US Secretary of State Mike Pompeo's visit to New Delhi.
The H-1B visa programme brings skilled foreign workers to the United States every year and India is the largest recipient of these temporary visas. There is no current country-specific limit on the 85,000 H-1B work visas granted each year and an estimated 70% go to Indians.
India has irked the US government with stringent new rules on data storage. "Data localisation" is when a country places restrictions on data as a way to gain better control over it and potentially curb the power of international companies. US firms have been lobbying hard against this all around the world.
Those most affected by such a cap would be India's multi-billion dollar IT sector, which uses H-1B visas to fly engineers and developers to service clients in the United States, their biggest market.
The warning comes as trade tensions between the two nations are at an all time high with India imposing higher tariffs on some US goods, days after Washington withdrew a key trade privilege for New Delhi.
