Monday, 21 October 2019

Howdy Modi : Harnessing the Diaspora

By Amit Gupta from Houston
Updated: October 3, 2019 12:27 pm

The optics of Howdy Modi were excellent:  50,000 wealthy Indian-Americans showed up to fete the Indian Prime Minister and the atmosphere was akin to that at a meeting at an American megachurch; Donald Trump was the perfect foil; a number of Congressmen, including influential members like Steny Hoyer and John Cornyn were in attendance;  and the Indian Prime Minister got coverage in the American media.  But Howdy Modi can be much more than a public relations success. The Indian diaspora is willing to participate in the project known as Make in India.  The Indian government lacks the vision to know how to do it but it can be done.  In an age where India needs investments and technological knowledge this is an imperative.

The Indian-American Diaspora

The Indian-American diaspora now numbers over 4.4. million people and the community is wealthy, well-educated, and increasingly politically influential.  The community is easily the most wealthy minority in the United States and its wealth and accomplishments continue to grow.  The median household income of the community is now $107,000 while the American median household income is now $61,937 so the Indian diaspora is at almost double the American norm.  It is also the best educated since nearly 80% of the community has a Bachelor’s degree and over 50% has a Masters degree or Ph.D.  In contrast, 31% of Americans have a Bachelor’s degree.

The community has punched above its weight if you look at the number of Indian immigrants who have been success stories in America.  Thus, Vinod Khosla was one of the co-founders of Sun Microsystem while Indra Nooyi became the CEO of Pepsi.  Sundar Pichai heads Google and Satya Nadella heads Microsoft.  Nadella’s rise is particularly noteworthy since he took a company that by the early 2000s was in the doldrums and raised it by 2019 to very high levels of profitability (Microsoft shares went from $20 in the early 2000s to a 2019 value of $139 per share).  Indian doctors, IT developers—15% of all start-ups in Silicon Valley are created by Indians—and academics now have had a major impact in their professions.  Not surprisingly, therefore, the community is known as the model minority.

Politically, the community has worked to get more representation in city, state, and national legislatures and in Kamala Harris has the first presidential candidate who is partially of Indian-American heritage.  The list of Indian-American politicians is truly impressive:  Congressmen like Ro Khanna and Raja Krishnamurthi; Governors Nikki Randhawa Haley and Bobby Jindal; and even a city councilwoman named Kshama Sawant who led the charge in the city of Seattle to raise the minimum wage to $15 an hour since this was seen as a living wage.

Indian lobbying groups have also worked hard on issues like the H1-B visas, facilitating family repatriations, and even working to help get the Indian nuclear deal passed in the United States Congress during the George W. Bush administration.  The move to get politically involved is even more apparent in the next generation of Indians who are not only political activists but increasingly seeking political office at all levels in the country.

Economically, the Indian-American diaspora remits over $11 billion annually to India and if we add the annual visits by Indian-Americans to relatives the indirect expenditures in India become even higher.  It is worth remembering that the India’s global diaspora annually remits $63 billion to India which is more than all the Foreign Direct Investment that comes into the country—total FDI to India in 2018 was only $42 billion.

What the Diaspora will and won’t do

Despite all the hype about the Indian-American diaspora, there are somethings they will do and a lot of things that they will not.  First, they are not the major remitters of money to India because the Indian diaspora in the Gulf send more money to its relatives.  Second, they do not invest in India in the way that the Chinese diaspora has invested in its home nation.  Members of the Chinese diaspora, who are called sea turtles, have gone back in large numbers to set up businesses or to work in Chinese industry and at least some of China’s economic growth and technological development has resulted from the return of such people.  Nothing comparable has been done by the Indian diaspora.

Thirdly, as the Israeli diaspora expert Yossi Shain points out, diasporas behave predictably and when there is a conflict of interests between their host state and the home country the overwhelming majority support the host country’s position.  This goes against the canard that diasporas are “fifth-columns” working to blindly push the interests of their country of origin.

Fourthly, diasporas are not homogenous bodies that speak with one voice.  In the United States, for instance, there are Tamil, Tamil Brahmin, and Sri Lankan Tamil associations.  A growing number of people also do not want to identify with the broader national identity but instead with their narrower ethnic origins.  Thus, we now see people referring to themselves as Gujarati Americans and Sikh Americans and it would be interesting to see if any other Indian Prime Minister would have got the reception that Mr. Modi got from the Hotel, Motel, Patel crowd that are his biggest fans.

Fifthly, diasporas have also got diverse political leanings and attitudes and you only have to look at the recent political activism of parts of the Indian-American diaspora.  A section of the diaspora was able to successfully deny a US visa for the better part of a decade and that denial was only rescinded when he became prime minister.  While now there are pro-BJP and pro-Hindu diaspora groups, there are an equal number of groups who are appalled by the movement towards a center-right government in India while others bemoan the perceived loss of secularism in India.

The limits of Howdy Modi

The limits of the diaspora and that of the India-US relationship at the governmental level came out in the aftermath of the Howdy Modi event.  The event in Houston was a public relations success for both Modi and Trump and supposedly highlighted the great relationship between the two leaders.  Barely two days later, however, Mr. Trump was back to parroting his line about arbitrating between India and Pakistan much to the chagrin of New Delhi.  And this is the crux of the matter: the relationship between the two countries does not go beyond platitudes and optics at the governmental level so using the diaspora to try and improve this relationship is difficult.  Trump or any other president will put his political interests first and unlike in the case of Israel and Britain, India does not have strong emotional ties with the American public.  Given these caveats, how should India engage the diaspora?

 

Engaging the Diaspora

The Indian American diaspora can offer India investments, technology, and human skills but to harness them the government needs to develop a policy that is diaspora friendly and allows for the free movement of people, goods, and services.

Much has improved in the Indian relationship with the diaspora as the Overseas Citizenship of India cards have given the diaspora the ability to readily come to the country instead of going through a cumbersome visa acquisition process. Further, in a globalized world we now have the concept of the “digital diaspora” where thanks to modern technology overseas are far more integrated with their homelands than they were even as recently as the 1990s.  Moreover, the governments of some of the Indian states—notably Gujarat and Andhra Pradesh—have done a sterling job of harnessing their diasporas by encouraging them to come and invest in their home states.  The Indian government, in contrast, has not made good use of this asset.

The Pravasi Bhartiya Divas that the government holds with great fan-fare every year has been reduced to an opportunity for the diaspora to take photos with India’s leaders particularly the Prime Minister.  But it can be made into so much more by trying to push diaspora involvement in three sectors—education, scientific infrastructure, and capital investment.

 

Education

Indians love to go on about the country’s education system but, in fact, it an ineffective system that produces workers that are largely incapable of working in a globalized work place.  In terms of universities, India only has one—the Indian Institute of Science—in global ranking of the top 500 universities in the world. In contrast, China, in 2003 had 9 universities in the top 500 and now has 51.  The Chinese have invested heavily in higher education and are using it, as well as the sea turtles, to implement the made in China 2025 strategy.  The strategy seeks to make China into a global technological power and the fact that the Chinese telecommunications company Huawei is two years ahead of anyone else in 5G technology is a testament to Beijing’s determination to become a knowledge economy.

If India wants to build a similar educational capability then the short-cut to achieve this is to get the help of the Indian-American diaspora.  The diaspora should be encouraged to come back to India to teach courses in both the social and hard sciences to bring Indian students to the level of their foreign counterparts.  At present, India spends over $4 billion to send students to study abroad and large numbers of these young people never return to the country.  An expansion of Indian universities with special faculty positions created for diaspora members would be an easy way to quickly build up the educational capabilities of the country and it is easier to do than most people think.

A large number of Indian scientists, doctors, and academics are now in their sixties and on the verge of retirement.  Their children are grown up and they don’t play golf so they are bored.  Many of them, therefore, would relish the idea of coming to India and contributing to the growth of the country especially if there were allowed to do this in the state of their choice (not everyone wants to live in Delhi or Mumbai).  Further, because these people have made their wealth in America, they are not looking for large salaries and would be most likely to work for a regular Indian academic salary.  To do this, however, would require an initiative from the Prime Minister’s office since there is strong opposition from Indian academics to the influx of foreign scholars.  Yet India desperately needs such an educational input if it does not wish to fall behind the rest of the world in critical technologies like robotics and artificial intelligence. Even in the social sciences, the country needs people who can read, write, and effectively speak in English.  A few years back the British Council in a study pointed out that the country had a major shortfall of functional English speakers.  India cannot allow this gap to widen.

Scientific Infrastructure

As far as Make in India is concerned, the obsession of politicians and the media is to get defense projects into the country.  Yet these are the worst possible investments to seek.  They do not create large scale employment and they require a very expensive investment in the development of human talent to work in these fields.  On the other hand, the other 29 areas of Make in India include pharmaceuticals, tourism, and wellness.  In these sectors not only are investments much cheaper but the work force does not require the type of expensive training that is needed in the defense sector.  A classic case in the production of insulin where, in the west, the costs have skyrocketed with the average American paying over $300 a month for their daily dose.  An Indian industry which was plugged into providing such generic drugs to the western markets would not only be very profitable but generate high levels of employment and the diaspora, with is large collection of doctors and scientists, would know from where to bring in investments and technology to set up such production facilities.

Another area where the Indian economy could help is setting back offices to help carry out tasks seamlessly for western companies.  At present, American law firms have back offices in India that do much of the contract drafting work for these corporations and there are a number of fields where such back offices could be set up.  Again, the diaspora has the connections in both countries to facilitate this.

 

Investment

The Indian American diaspora is not like the rich in India who are reluctant to set up charitable establishments.  A few years back, Bill Gates and Warren Buffett sought to generate philanthropic spending in India but met with a lukewarm response.  Indian Americans can, however, invest in setting up scientific and social institutions that would help build the country.  They would just like to know that their money was not being wasted in political squabbles or corruption.  Enticing such money to come, therefore, must be a priority for the government.

The diaspora provides India with an enormous opportunity for growth without the strings that come with foreign capital.  Thinking proactively to harness this opportunity, however, requires imagination and boldness. In other words, you have go beyond Howdy Modi to Make in India.

By Amit Gupta from houston

(Amit Gupta is a strategic analyst based in the USA.)

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