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RBI’s Data Localization Sees Backlash From US, May Restrict H-1B Visas

RBI’s Data Localization Sees Backlash From US, May Restrict H-1B Visas


In the latest move in a back-and-forth between Indian regulators and foreign companies, the United States has allegedly told India that it is considering restricting the popular H-1B work visas for the country. This is a risky move for India’s position in the global labour market, as over 70% of all H-1B visa applicants are Indians.

This move is reportedly due to mounting tensions over India’s data localization norms. The financial regulator of the country, the Reserve Bank of India, has been mulling over localizing payment data of international companies. This is reportedly a move to consolidate the regulator’s reach in digital payments.



However, many companies such as Mastercard, Facebook, Amazon and more are finding difficulties in the data localization procedure. The norms ascribed by the RBI state that payments data must be stored exclusively in India, and not in any other country.

The move, if confirmed, would be a huge blow to the IT industry in India. As mentioned previously, a majority of H-1B visa applicants are Indians. Various companies also engage in consulting and outsourcing services using Indian manpower, most prominent among them being Tata Consultancy Services, Wipro and Infosys.

The RBI has also recently undertaken a meeting to see how existing data localization norms can be revamped to suit the needs of foreign companies. Apart from pressure from the United States, companies have also been opposing the move as it requires additional expenditure and infrastructure.

As a part of the meeting, regulators assured companies that a better move would be made with respect to the norm. It was also mentioned that the RBI did not specify what kind of data they wanted to be stored and what they did not want to be stored, leading to further confusion in the companies.

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Some products, such as Facebook’s WhatsApp Pay have also been put under reconsideration over future progress owing to their non-compliance with data localization norms. Existing norms state that India must be the exclusive location of any and all financial transaction data. In the age of data flow and analytics, it is not important for the RBI to ensure that the data is stored purely in India.

The move by the US government is set to reduce H-1B visa quotas for any country engaging in data localization. It is left to see how the situation develops, as American visas form a big chunk of revenue for consultancy corporations.


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