(Image source from: Reuters)

Days before the Secretary of State Mike Pompeo’s visit to New Delhi, the United States is mulling caps on H-1B visas on India.

The cap - under which skilled foreign workers are brought to the U.S. each year - is being considered by the Americans for the nations which store data locally, according to a report by Reuters.

With the new move in place, the already bitter relations - on trade and tariffs - are likely to spike in the coming days. The move would not only affect the Indian software companies, but also the global IT giants based in the U.S. who seek to hire local talent from India in a bundle.

The latest initiative by the United States comes days after India upset firms such as Mastercard and irked the U.S. government with stringent new rules on data storage.

The tit-for-tat tariff actions in recent weeks would not only harm the trade between the two nations but likely to even dampen the business opportunity the U.S. is looking with India, under the newly elected Bharatiya Janata Party government at the Centre.

Under the new plan by the United States, the cap on H-1B visas would be between 10 percent and 15 percent of the annual quota for Indians. However, currently, as there is no limit, an estimated 70 percent of H-1B visas go to Indians.

Apart for this valid information, sources say that plan was linked to the global push for 'data localization', in which a country places restrictions on data as a way to gain better control over it. Also, this potentially curbs the power of international companies. The U.S. has till now lobbied hard against data localization rules around the world.

By Sowmya Sangam