The Indian government plans to widen the ambit of its trade negotiation with the United States by including the services sector as well after President Donald Trump abruptly increased the cost of new H-1B visa applications to $100,000, Bloomberg reported on Tuesday.

Commerce minister Piyush Goyal is visiting the US this week primarily to negotiate a trade deal for merchandise goods but Trump’s latest crackdown on immigration has pushed New Delhi to include the H-1B visa restriction, a setback to India’s burgeoning IT sector.

The minister’s visit came weeks after Trump slapped a 50 per cent tariff in two back-to-back tranches covering two-third of Indian exports which came into effect from August 27. New Delhi was hoping to restart the stalled negotiations to reduce tariff when the visa blow was announced on Friday.

India’s ministry of commerce and industry didn’t immediately respond to an email seeking comments.

Trump’s move to hike fees on new H-1B applications for skilled workers will disproportionately hurt Indians, who make up two-thirds of the visas. The move threatens the nation’s $280-billion tech services industry, putting thousands of jobs at risk.

According to the initial plan of an Indo-US bilateral trade agreement (BTA), merchandise trade was to be taken up in the first tranche, leaving the services sector for the later phases.

India has made similar demands around mobility of its workers in other trade negotiations, which have sometimes been contentious. Talks on a UK free trade agreement stalled in 2022 because New Delhi wanted more visas and easier rules for Indian nationals seeking to work in Britain.

The two countries eventually agreed on a trade pact this year, which allows, among other things, 1,800 visas for some services up to a year of contractual services.

India is also seeking easier mobility provisions for its workers in current trade negotiations with the European Union.

Prospects of a trade deal between the US and India remain uncertain given the latest immigration rules and Trump’s demand that New Delhi stop buying Russian oil. Talks resumed last week after Trump called Indian Prime Minister Narendra Modi on his birthday. Trade negotiators last week described the one-day discussions as “positive”.

On Monday, US Secretary of State Marco Rubio met Indian external affairs minister S. Jaishankar and stressed that ties between the two countries remain “of critical importance”.

Despite the vibe, the punitive tariff and work visa restrictions show negotiations with the US would be complex and could take time to work out.

Last week, India’s chief economic adviser V. Anantha Nageswaran had expressed hope the penalty tariff of 25 per cent was unlikely to be there beyond November 30. However, the visa fee hike announced days later opened up another potential area of conflict with the US.