Reacting to reports of the United States mulling a cap on the number of H-1B visas issued to Indian workers, IT industry lobby group the National Association of Software and Services Companies (Nasscom) has said that there has been no official confirmation of the purported move and it is waiting for clarity on the matter.

The United States told India it is considering caps on H-1B visas for nations that force foreign companies to store data locally days ahead of U.S. Secretary of State Mike Pompeo's visit to New Delhi, Reuters reported on Wednesday citing three sources with knowledge of the matter.

The warning comes as trade tensions between the United States and India have resulted in tit-for-tat tariff actions in recent weeks. From Sunday, India imposed higher tariffs on some US goods, days after Washington withdrew a key trade privilege for New Delhi.

The $150 billion Indian IT sector uses the work visas to fly engineers and developers to service clients, including software giants such as Microsoft Corp, Alphabet Inc and Facebook Inc in the US, their biggest market.

“There have been some speculation that the US Administration is considering lowering the cap on new H-1B visas. However, there has been no official confirmation yet from the US government on the matter yet, and we await clarity from official sources,” Nasscom said in a statement.

US President Donald Trump’s administration is mulling placing a 10-15 percent cap on H-1B visas issued to Indian tech workers, added the Reuters report. There is no current country-specific limit on the 85,000 H-1B work visas granted each year and an estimated 70 percent go to Indians.

However, the government has not received any communication from the US side, sources told CNBC-TV18.

Nasscom added that the restrictions on skilled workers’ entry to the United States will only undermine its global leadership in technology and may force the US tech companies to outsource services to other nations.

“The United States’ global leadership in technology has been made possible, in part, by its ability to attract the most talented workers from around the world. If US policy make it more difficult to hire advanced tech workers, it will only weaken the US companies that depend on them to help fill their skills gaps, put jobs at risk, creating pressure to send technology services abroad.

“In April 2019, the number of unfilled jobs stood at 7.5 million. 67 percent of these, or 2 in every 3 jobs, required specific technical skills. It is this very unmet technical requirement that skilled immigrants, including workers on H-1B visas, have helped meet in the US”, the statement added.

Nasscom acknowledged that the biggest beneficiary of the H-1B visas are the Indian tech workers and the US companies will suffer as a consequence of the cap, if implemented.

“Indian nationals accounted for majority of all approved H-1Bs in FY 2017. This is a testimony to their skill-set. Only a small share of these Indian nationals are employed by Indian companies. The vast majority of them are sponsored by global and US multinationals. If such a move were to be implemented, it will imply an even further crunch for businesses to access the skilled workers they need – this is true for all businesses operating in the US; including both Indian as well as American and global firms,” the statement added.

"The American companies themselves need Indian talent, so if there is a cap on these visas, this will impact US companies also and hurt their business interests," said Sudheer Guntupalli, an analyst with Ambit Capital in Mumbai.

"Clearly this seems to be a retaliatory measure from the US government."

Shares of sector heavyweights Infosys fell as much as 2.13 percent on Thursday, Tata Consultancy Services Ltd (TCS) lost 2.12 percent and Wipro fell over 3 percent in early trade, following the report, before recouping losses later in the day.

Infosys and Wipro did not comment on the matter, while TCS did not immediately respond to requests for their views on the report.

With Reuters inputs

First Published:Jun 20, 2019 4:11 PM IST