US Threatens India With 10% Limit On H1B Visa; The Reason Is Data Localization Rule By RBI

It seems that India and the US are in the midst of an intense trade war.

After US imposed higher tariffs on some 29 US goods being imported into India, and the data localization rule becoming a reality, US Govt. has threatened to put a cap on H1B visas allocated to Indians.

This is indeed a direct, and sharp response to India’s new aggresive business stand vis-a-vis to the US.

Who will be the last man standing here?

US Govt. Threatens With H1B Visa Cap

Days before U.S. Secretary of State Mike Pompeo’s visit to India, few unnamed Indian officials have leaked a news to Reuters: US Govt. is considering a cap on H1B visa allocation to Indians.

This cap can be between 10-15% of the overall H1B visas allocated. If this cap is implemented, then this will be a huge loss for Indians working in the US.

This cap will mean that out of 85,000 annual H1B visas allocated to non-Americans, only 10-15% or 8500 to 12,750 will be allocated to the Indians, at the max.

Currently, 70% of the overall H1B visas (or 59,500) of the H1B visas are annually granted to the Indians.

This threat of the cap on Indians getting H1B visas will be a serious blow to Indian IT companies who have a presence in the US, and heavily dependent on Indian skilled employees. Also, it will impact US-based tech companies, which hire Indians for their skills.

It will be a loss-loss situation for all.

But Why This Cap On H1B Visa Is Being Proposed?

As per the two Indian officials, they were briefed by US officials regarding this proposal to limit H1B visas to Indians, due to the data localization rule being imposed by RBI.

RBI and NPCI have made it clear that every fintech and payment company operating in India will have to save the data related to Indians, inside India.

This can pose a huge problem to global payment biggies such as Mastercard, Visa among others such as Microsoft and Google, because if that happens, then they will have to spend a considerable amount of money and resources to create data centers in India.

And, they will also lose control over their data, which is the biggest concern.

One of the officials 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,”

Interestingly, RBI has said that the data localization rules for foreign companies can be relaxed in the coming days.

We are not sure if both of these developments are related or not.

We will keep you updated, as more details come in.

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