The measure would boost annual US visa costs for India's outsourcing industry by 200-250 million dollars annually, the National Association of Software and Services Companies (NASSCOM) warned.

S. Gopalakrishnan, chief executive of India's second-largest outsourcer Infosys Technologies, told reporters late Monday he was "saddened and disheartened" by the step and said the sector would lobby strongly against it.

India, which already holds at least 50 percent of the global outsourcing market, has become the world's back office where Western firms set up call centres, number-crunching and software development outlets to cut costs.

But the 50-billion-dollar industry also sends skilled workers to the United States to develop software and direct projects for US clients.

The visa legislation, sponsored by two Democratic senators and passed unanimously by the Senate last week, still needs to be approved by the US House of Representatives and signed into law by President Barack Obama.

The row has erupted as India gets ready to host Obama later this year.

With anti-outsourcing anger stoked by high US unemployment, critics denounce the Indian firms as "body shops" because they provide Indian professionals to US companies rather than employing Americans.

"We think it (the bill) goes against the notion of free trade and is discriminatory," India's third-largest outsourcer, Wipro, said in a statement.

The measure would raise by 2,000 dollars per application the US fee paid by any company with more than 50 people in which over half the workforce has H-1B and L-1 visas earmarked for skilled foreign workers, industry officials say.

The current visa fee is 2,500 dollars.

The proposal is to use proceeds from the fee hike to pay for the US government's plans to boost security along its border with Mexico to help crack down on illegal immigration and drug smuggling.

"While we understand the need for heightened border security, we believe the extra fees will produce negative consequences for both US and Indian companies," said NASSCOM president Som Mittal.

Sponsors of the bill on a Senate website said the legislation would hike fees on particular Indian companies -- including Wipro, Infosys, Tata and Satyam -- which they accuse of seeking to "exploit" the two categories of visas to "import foreign workers into the United States."

Indian IT firms fly thousands of employees each year to the United States to work at their clients' locations as on-site technicians and engineers in what critics claim is a violation of the "spirit" of US immigration law.

US high-tech firms such as Microsoft, which bring skilled immigrants into the United States on the same visas, would not be hit by the bill as the vast majority of their workforce is composed of Americans.

"US companies, which use the bulk of these visas, would remain unaffected by the legislation," NASSCOM's Mittal said. "This is simply unfair to foreign companies."

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