The UK contributed to nearly $20 billion or 18% of India's $108 billion software exports for 2016.
Ayan Pramanik reports from Bengaluru.
The UK government has decided to increase yearly salary threshold for technology professionals applying for visa by 44 per cent.
Under the new visa rules announced by the UK Home Office, anyone applying after November 24 under the Tier 2 intra-company transfer (ICT) category would be required to meet a higher salary threshold requirement of £30,000.
The ICT route is largely used by Indian IT companies in Britain, and the UK's Migration Advisory Committee had found earlier this year that Indian IT workers accounted for nearly 90 per cent of visas issued under this route.
The proposed changes in the UK visa policy come days before British Prime Minister Theresa May lands in India on Sunday on a three-day visit.
India's software body Nasscom on Friday said it was disappointed, but not surprised.
The move, it has warned, would hurt growth and productivity of the UK economy. It said the Indian information technology sector would engage with May during her visit.
'A system that restricts the UK's ability to access talent is also likely to restrict the growth and productivity of the UK economy. The UK needs to have the right policies in place to encourage valuable temporary immigration, and minimise barriers to the flow of talented people,' Nasscom said.
The new rules will have tougher language requirements for family members of workers settling in the UK.
The UK contributed to nearly $20 billion or 18 per cent of India's $108 billion software exports for 2016, says Nasscom.
Most of the revenue comes from financial clients such as RBS and Lloyds, which have been outsourcing to Indian firms such as Infosys and Tata Consultancy Services to cut costs and improve efficiency in their operations.
India's IT sector has been engaged with the UK government for an agreement that could override India's concerns. But the progress has been slow.
Nasscom says May's visit could see a new India-UK trade agreement that allows skilled IT migration to the country, while asking both nations to look at skilled worker requirement as 'trade priority' rather than as migration.
'We intend to focus on the opportunities which May's forthcoming visit offers for a fresh approach to skilled IT migration as part of a possibly new India-UK trade agreement, matters which we were able to raise directly with UK government ministers and business leaders in London last month,' Nasscom said.
Experts say it is too early to see the move having an impact on India's software exports. but caution that Britain's 'protectionism' could hurt the country.
"The broader sentiment is the move is not pro-outsourcing. It is inward-looking and veers towards protectionism," says Sanchit Vir Gogia, chief analyst, Greyhound Research.
IMAGE: British Prime Minister Theresa May with her husband Philip May. Photograph: Stefan Wermuth/Reuters