Is US President Donald Trump¡¯s economic plan disastrous for India? The instant answer, more often than not, is a yes. It follows a predictable narrative.?
AP
Trump and his people want to stamp out the H-1B visa programme, push Indians away, keep jobs for Americans. Therefore, brace for bad tidings. Obvious as this may appear, the assumption still needs to be taken beyond face value. To begin with, it¡¯s not prudent to judge a new US president from a narrow IT perspective. And then, Indian IT prowess in the US doesn¡¯t stand on such feeble legs that it can¡¯t make a statement by itself.?
Data bears that out. Indian IT bodies have been highlighting that the top seven Indian companies account for only 13% of the total new H-1B visas issued. This is a fraction of what big US companies like Google, Amazon or Microsoft corner. Which brings one to the issue of cost of labour.?
BCCL/representational image
Outsourcing isn¡¯t about just cheap labour because an H-1B worker gets paid more than a ¡®native¡¯ US employee. A Brookings study in 2013 showed that an H-1B worker got paid $76,356 a year compared to $67,301a year by a US national with a bachelor¡¯s degree of equivalence. Subsequent studies have shown that the entry of H-1B professionals has no adverse impact on unemployment rates in the US.?
So, the issue is about a certain quality of skilled labour that¡¯s not easily available in the US. Which is why there¡¯s a capping on numbers and wages for H-1B visa-holders.?
The Indian system is well armed with these facts. After all, this isn¡¯t the first time that the H-1B case is to be laid out and differentiated from the job-loss campaign. Foreign secretary SJaishankar, in his recent address at the Gateway of India dialogue, also put out the official line when he drew adistinction between ¡®offshoring¡¯ and ¡®outsourcing¡¯ of US jobs.
Also Read: Industrialists Say Trump's Policies Including H1-B Visa Restrictions Could Be Good For India
BCCL
But what¡¯s more important to understand here is where Trump is coming from and what he¡¯s getting at. His politics, his persuasion and whether the ¡®job-takers¡¯ label on Indians can be duly challenged within his political logic. Essentially, why India would make more sense to Trump than, say, China or even Mexico??
Let¡¯s go back to outsourcing again. Most US companies that hire Indian workers have now organically evolved to target the Indian market. And, the steady presence of Indians in these Silicon Valley companies has made that possible. Now we hear the companies outline detailed business plans for India and its catchment region.?
So, outsourcing as a business model is now going beyond just attracting skilled talent. It¡¯s now very much the engine for expanding into new markets, thereby creating more jobs both in the US and outside. In many ways, outsourcing has sparked off a wellnetworked ecosystem that¡¯s bringing more investment opportunities for US companies to grow.?
Also Read: Indians Working On H-1B Visa Made US Firms Remain Competitive Globally, Says Indian Envoy To US
Reuters
Why is this any different from Trump¡¯s larger charge against American companies taking away jobs from the US across sectors? Most manufacturing companies shut shop in the US and went to China or Mexico because it was simply cheaper to manufacture there. The tax breaks and other incentives far outweighed the cost of sacrificing skilled workers in the US and reskilling local workers there.?
These companies did not go overseas in search of skilled workers and neither did they pay them more than US ¡®native¡¯ workers. Which is quite the opposite of the outsourcing model.?
Now, that¡¯s only still the economic differentiator. The principal political point that informs the Trump plan is that while these companies manufactured goods outside, the US always remained the main market to sell their goods. Washington¡¯s various free trade agreements, Trump has argued, supported this process that eventually saw working-class America lose jobs while rich Americans prospered and got by with Chinese-made goods.?
AFP
India, however, is different. The Indian case for investment rests on its own market potential. Just like in the IT sector, foreign companies have sought to invest here to target the huge Indian market. Unlike China or many other countries, India has never been an attractive manufacturing destination to principally service the US market.?
However, taking a leaf from the IT sector, India can project itself as an investment destination for US companies trying to target India and its catchment market. So, if Lockheed or Boeing were to make fighter aircraft here, they would be expanding their opportunities in this region, not shutting shop in the US. Which is why the politics around differentiated labour costs must be addressed in an equitable manner and India has nothing lose in that conversation.?
In sum, Trump¡¯s mandate pivots on a compelling political logic with huge domestic traction, which isn¡¯t designed to hurt India. So, there¡¯s enough scope for conversation and opportunity if only we look at outsourcing beyond just H-1B visa limits and US investment into India beyond just being a better alternative to China.?
In other words, rather than coming across as incremental, innovative visa-keepers and seekers, a bolder rebranding of India may be a better and effective way to shake off old baggage to deal with new America.