How long can India brave global economic disruptions?

While the Modi government has invested a lot in foreign policy in its three years in office, New Delhi can hardly insulate itself from the global political and economic disruptions. More and more countries are electing inward-looking leaders. Apart from opposing free trade, such leaders are also adopting an increasingly anti-immigrant posture.  

Keeping with his election promises, Donald Trump, on his very first day in office, terminated the Trans-pacific partnership (TPP). Recently, the Trump administration also revised H1-B visa rules. As per the new visa regime, the minimum wage of an H1-B visa holder is to be $130,000 per annum. This clause will render Indian software professionals uncompetitive in the American job market. A consequence of the new regime is that it will become almost impossible for Indian software programmers to secure entry-level computer programming jobs. Till very recently, Indians were the biggest beneficiaries of the H-1B visa programme with 70 per cent of the total H-1B visa petitions approved in 2014 were for Indians. 

Interestingly, the notion of transfer of American jobs to other countries is totally misplaced, as a 2015 study shows that only 13 per cent of manufacturing job losses are attributable to trade or relocation of factories to other countries, while the rest to automation. The study further estimates that American metropolitan areas may lose more than half (55 per cent) of their current jobs as a result of automation in the next two decades. 

In fact, former US President Barack Obama, in his farewell address had made the point that “The next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good middle-class jobs obsolete,” 

Recently, the Australian prime minister followed in the footsteps of President Trump by announcing the abolition of the 457 Visa programme, and its replacement with a new visa regime which ensures that Australians get preference in job selection. Meanwhile, PM Modi has raised India’s concerns regarding the visa regulation change with the Australian prime minister.

Indian strategy

Firstly, there needs to be a clear understanding of the fact, that while on strategic issues we have convergences with certain countries, insular policies of leaders — both on the right and left — will harm India. 

Secondly, the Modi government has already understood many of these disruptions and their likely impact on the Indian economy. It needs to be credited for launching programmes like ‘Start-up India,  Stand-up India’ and Digital India for encouraging entrepreneurship and innovation while understanding the relevance of technology.  The results of these programmes may take time, but they have already shifted the conversation. 

New Delhi does not have to look beyond the example of Israel, which has achieved immense success in the sphere of start-ups in recent years. 

The Modi government also needs to be lauded for realising that while many parts of the world are becoming more and more insular, India’s neighbourhood is keen to enhance connectivity and strengthen economic linkages.

Efforts at integrating with in this sense are important. The next step should be to ensure that these countries can benefit from programmes like ‘Start-Up India’ and ‘Digital India’. 

Finally, while Modi has sought to reach out to the Indian diaspora, he should encourage more and more IT professionals who may have been hit by visa restrictions to contribute to India’s next technological revolution, and also to contribute towards the success of start-ups.

In conclusion, India should look at the current disruption as an opportunity while being prepared to battle challenges of such protectionist measures in the short term.

Tridivesh Singh Maini is Assistant Professor with The Jindal School of International Affairs, OP Jindal Global University, Sonipat (India). Sandeep Sachdeva is an Independent Policy Analyst. Views are personal.