The US administration is reportedly planning to impose visa restrictions on Indian professionals working in their country, in retaliation to data curbs imposed by India.
The US has told India it is considering a cap on H-1B work visas for nations that force foreign companies to store data locally, according to a news agency report that cited two unnamed senior Indian government officials.
According to the two officials, the US government informed them about this a week ago.
Under the H-1B visa program, skilled foreign workers are allowed to work in the US for a limited period. Indian software majors such as Infosys and Tata Consultancy Services use them widely to bring in their professionals to service clients in the US.
Of the 85,000 H-1B work visas granted each year, an estimated 70% of the recipients are Indians.
Not only will it impact Indians already in the US, it will also have cost implications for the tech industry. Indians are paid substantially lower wages compared to their American counterparts. A reduction in Indian workers could lead to higher costs for tech companies.
The bone of contention between the two countries is the Reserve Bank of India’s (RBI) push towards data localization. In April last year, it told global card payment companies they should store data on transactions locally if they happen in India.
Both Mastercard and Visa Inc initially expressed reservations about the directive and lobbied against it, but later complied with the central bank’s missive. US firms have lobbied hard against data localization rules around the world.
In its April 6, 2018, circular the RBI said: “All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India. This data should include the full end-to-end transaction details/information collected/carried/processed as part of the message/payment instruction.”
Many US tech companies also feel this could have a major impact on the privacy concerns of Indian citizens. Privacy has been recognized as a “fundamental right” under India’s constitution following a nine-judge bench constitutional court ruling.
Piyush Goyal, India’s minister for commerce and industry, recently returned from a WTO meeting and stated the Narendra Modi government’s intent to go ahead with data localization. However, experts have frequently expressed doubts about the complete localization of data.
Since data travels across several jurisdictions due to the architecture of the internet, it is nearly impossible to restrict all data to one jurisdiction permanently. This led the European Union to frame their General Data Protection Rules (GDPR) for all EU citizens wherever they were. This helped them address privacy concerns across multiple jurisdictions.
The Trump administration has been upset that US companies have to suffer due to protectionist data regulations in several countries, including India, China, Indonesia and Vietnam.
The warning comes as trade tensions between the US and India have increased. The US had withdrawn access for Indian products granted under its Generalized System of Preferences. In retaliation, India raised tariffs on 28 items imported from the US.
Interestingly, US Secretary of State Mike Pompeo will be visiting New Delhi during his week-long Indo-Pacific region trip, which will start on June 24.