{
"authors": [
"Shivnath Thukral"
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"Carnegie Endowment for International Peace",
"Carnegie India"
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"primaryCenter": "Carnegie India",
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"regions": [
"South Asia",
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"topics": [
"Economy",
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}
Source: Getty
India needs to think about what matters to it both economically and politically. It must be able to turn adversity into opportunity.
Source: Times of India
Nothing that Donald Trump is doing as the 45th President of the United States should surprise India. Trump won on a mandate driven by a deeply fractured and insular vote bank which sees him as a messiah. But India has an opportunity to seize the moment.
Legislation has now been introduced in the US House of Representatives which, among other things, calls for more than doubling the minimum salary of H-1B visa holders to $1,30,000, making it difficult for firms to use the programme to replace American employees with foreign workers, including from India. The question is, how should India react? The room to play is limited and will disappoint those who hoped against hope that Trump’s Muslim ban will not extend to professionals working in the information technology sector under the H-1B & L-1 visa rule.
But if one goes by a sudden drop in stock prices of Indian IT companies and the growing noise Trump’s advisers are making on streamlining the process of issuing visas to foreign citizens, the future prospects of thousands of engineers studying in the US is bleak. While IT giants like Google and Facebook should and will fight this out legally, the problem is the uncertainty it creates for both future employees and employers.
India has an opportunity to make three broad moves. First, create a special cell which comprises top officials from the foreign ministry, commerce ministry and finance ministry to reach out to all global IT and financial companies affected by Trump’s moves, and offer them a special scheme to house engineers here in India. Most of these majors already have big establishments here; the question is how we can make them grow exponentially within a very short period of time.
The cell will need to work like a quick response team which plays on India’s proven track record of housing Indian offices of these companies, a stable legal system and a political environment which is a better option than the present American one. We could play host and become a bigger engineering and innovation hub than we are. It is a chance for India to present itself as the best option for the future.
Second, Indian IT majors have to reinvent their models if they find overnight that their engineers are being packed on flights home, thanks to Trump’s policies and domestic hiring laws. The bill moved in the US which raises the minimum salary to $1,30,000 will restrict the options of hiring Indian IT engineers who were so far governed by the minimum salary of $60,000, allowing companies to keep costs under control. Clearly American companies will have to deal with lower profitability but for the Indian companies it is crucial that they can offer a solution without disrupting businesses worth billions of dollars. Can Indian IT companies move fast enough to counter this uncertainty which is where the opportunity may be in the near future? This will mean changing business models radically, reacting to a business need created by a political development.
Finally, it is a well-known fact that businesses like certainty and stability. Within a few months, the season for major global conventions and conferences begins in the US. The organisers will want to take some measures to have a clear line of sight. According to a PwC report from 2012, the US convention industry spends $280 billion annually. The report also says this sector generates tourism spends worth $130 billion annually.
Given the uncertain visa regime, many visitors will turn shy of US as a conference destination. This is big business as the numbers indicate which have surely grown from 2012. There are Indian cities such as Hyderabad, Vizag and Mumbai which can offer solutions to these organisers and eye a significant chunk of this business. This could be a Y2K moment for the conference industry, if the private sector and government agencies make it a priority to target this business.
India needs to think about what matters to it both economically and politically. It must be able to turn adversity into opportunity; nothing stops us as a nation from reaching out and seizing the opportunity.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
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