Bengaluru/New Delhi: Shares of Indian information technology (IT) companies fell on Wednesday after two US senators introduced a legislation to cut by a fifth the number of H-1B visas issued to skilled workers such as IT professionals.

The legislation proposes that such permits be given first to foreign workers who earn the highest wages, Press Trust of India reported. The report revived concerns that the US may restrict the movement of Indian technology professionals to that country, hurting profits and inflating costs of Indian IT firms.

According to an analysis of government data obtained through a Freedom of Information Act request in August by Computerworld, a digital magazine for IT and business technology professionals, the US grants almost 86% of the H-1B visas to Indians. Most H-1B visa holders work for outsourcing firms such as Infosys Ltd and Tata Consultancy Services (TCS) Ltd, it said.

Barring TCS, shares of other IT giants reacted negatively. While India’s largest IT firm TCS’s shares rose 1.55% to 2,365.70 at the close of trading on the BSE, the stock of its closest rival Infosys fell 1.49% to 1,029.35. Shares of Wipro Ltd and HCL Technologies Ltd also dropped by 0.65% to 565.15 and 1.80% to 842.55 respectively. The benchmark Sensex fell by 1.08% to 25,036.05 points at close.

Each year, the US issues 65,000 H-1B visas for those with specialized skills, along with an additional 20,000 for those with advanced degrees.

The bill, filed by senators Bill Nelson and Jeff Sessions, seeks to cut down the number of skilled-worker visas available each year by 15,000. It also requires the department of homeland security to rank the allocation of the remaining 70,000 H-1B visas to foreign workers based on their salary.

“By cutting the number of visas available each year and requiring those visas be given to the highest-wage earners first, this bill directly targets outsourcing companies that rely on lower-wage foreign workers to replace equally qualified US. workers," senator Nelson, a Democrat from Florida, said in a statement posted on his website.

Of late, that quota of the number of visas issued in a year has been getting filled up in a matter of days after the US opens the window to collect the visa applications. The outsourcing firms that earn a bulk of their revenue from the US have been demanding an increase in this cap.

Nelson said the bill will help ensure that the H-1B visa programme is once again being used for what it was originally intended—to attract foreign workers with highly specialized skills not found among the US workforce. The latest bill comes barely a month after two other senators—Dick Durbin and Chuck Grassley—introduced another bill on the floor of the senate seeking increased curbs on the way skilled-worker visas are issued to foreign workers.

While some experts and companies have in the past dismissed the debate around immigration as mere rhetoric ahead of the 2016 presidential polls, industry trade body National Association of Software and Services Companies (Nasscom) has been worried about such hawkish legislative proposals.

“India and US have built a strategic partnership across sectors and recognize that free movement of global talent is a critical success factor for this partnership. Discriminatory or protectionist measures would adversely impact the India-US bilateral trade," Nasscom said.

HCL and Wipro did not respond to emails seeking comment.

If it does become a law, it could spell trouble for the Indian IT industry, which is on track to achieve $225 billion in revenue by 2020 and $350 billion by 2025.

“The impact on the Indian IT companies could be significantly detrimental," said Sanchit Vir Gogia, CEO of Greyhound Research. “How likely is it for an Indian worker to be the ‘highest wage earner’ among others? This just makes the whole process complex and increases the cost of application, which in turn would affect the margins, and hence the profitability."

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