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The Indian Diaspora in the United States

Arvind Panagariya

            Can the Indian Diaspora play the same role in the economic transformation of India that the Chinese Diaspora has played in the People’s Republic of China (PRC)?  At first blush, the answer would seem to be “no”.

By early 1980s, when PRC began to open its economy to foreign investors, the Chinese Diaspora in Hong Kong and Taipei, China was already among the most successful exporters of labour-intensive manufactures in the world.  The Indian Diaspora lacks this expertise.

Nevertheless, it is easy to underestimate the potential of the Indian Diaspora.  Thus, focusing exclusively on the Indians living in the United States, consider a few salient facts.

Based on median income, Indian-born residents in the United States comprise the highest-paid group in the country.  They are represented in virtually all professions including agriculture, biotechnology, business, economics, finance, information technology, journalism, management, medicine and various sciences.

As a visit to the websites of the leading universities will confirm, Indians enjoy a very substantial presence in the U.S. academia.  According to American Universities Admission Program, a global consulting firm, in 1997-98, a staggering 4,092 Indian professors were teaching in U.S. universities.  In the same year, 33,818 students born in India were registered in 2,579 universities.

In the medical field, the American Association of Physicians of Indian Origin boasts a membership of 35,000.  Fourteen out of every 100 researchers in the U.S. pharmaceutical labs are of Indian origin.  And a very large proportion of scientists at the prestigious Bell Labs, including its president and several vice presidents, come from India.

Above all, Indians have come to enjoy a dominant position in the information technology (IT) industry.  In an issue devoted to in-depth coverage of Indian immigrants in this industry, the Fortune Magazine (May 15, 2000) recently noted that without the Indian entrepreneurs, Silicon Valley would not be what it is today.  It placed the wealth generated by them at $250 billion, more than half of India’s current GDP! 

Despite the command of these resources, if we go by the low levels of investment it has brought, the Indian Diaspora in the United States would seem virtually irrelevant to India.  But this is a misleading inference.  Let me hasten to give just three examples. 

First, between 1990 and 2000, remittances from abroad have grown six-fold from $2.1 billion to $12.3 billion.  This growth far exceeds the growth in our exports and has had a distinct stamp of the Indian Diaspora in the U.S.: destination of the remittances has shifted significantly from Kerala and Gujarat to Karnataka and Andhra Pradesh.

Second, Indians in the United States are rapidly acquiring political clout commensurate with their financial wealth.  They are now poised to play the same role for their country of birth that other immigrant groups have played for theirs in the United States.  A dramatic example of this role was provided during the Kargil conflict.  While the war was in progress, Indian immigrants flooded Congressional offices with emails urging speedy resolution.  Later, in a front-page report entitled “Activism Boosts India’s Fortunes: Politically Vocal Immigrants Help tilt Policy in Washington,” the Washington Post (October 9, 1999) noted, “Lawmakers complied and a few days later, in a White House meeting, Clinton cited Congressional pressure in urging Sharif to withdraw his forces.”

Finally, following the recent earthquake in Gujarat, the Indian Diaspora around the world quickly mobilized substantial financial resources and collaborated with private relief agencies on a scale not previously observed.  It was on the strength of the Indian Diaspora that Bill Clinton was able to announce his intention to raise tens of millions of dollars for the earthquake victims.

These examples are only a preview of what lies ahead.  The proportion of elderly in the rich countries is predicted to rise dramatically in the forthcoming decades.  To support these elderly, the demand for skilled immigration from India and elsewhere is bound to rise dramatically.  This will likely increase both economic and political clout of Indians in the United States.  At the same time, as reforms progress in India and bureaucratic barriers come down, Indian Diaspora will increasingly look for investment opportunities in their country of birth in the new as well as the old economy. 

The rise of Indian multinationals, capable of wooing Indian professionals abroad back to their country, will only add to this process.  The hiring of 20 out of the 85 members of its drug-discovery team from U.S. and European companies by Ranbaxy Laboratories two years ago was just the beginning of that process.

What can the government do to tap the Indian Diaspora more effectively?  The steps necessary to achieve this objective are not dramatically different from the reforms needed to improve the country’s investment climate in general.  Nevertheless, two modest suggestions for targeted policy actions can be made.

Many Indians give up their citizenship at considerable emotional cost while many others keep it at substantial pecuniary cost.  This can be remedied to the mutual benefit of India and the Diaspora by genuinely instituting the right to dual citizenship.  Such a move will make the Diaspora feel welcome in their country of birth and induce them to expand their links to it.  It will give India a legitimate claim to the successes of its own: Nobel Prizes won by Indians abroad will genuinely come to belong to India.

We must also revamp our higher education system and policy.  Given the expected demographic changes in industrial countries, their demand for skilled workers is likely to rise substantially in the forthcoming years.  If we do not prepare ourselves for it today, we stand to lose our edge in this field to PRC.  Indian Diaspora is keen to bring its human and financial capital as also the connections to the U.S. academic world to India in this important field.  But it finds itself seriously constrained by the current policies and procedures.

Economic Times, May 23 2001