H1B: Let India be

By making the changes in the H1B visa, Trump has just done a huge favour to India.

It doesn't seem that way right now, and there will be a doom-and-gloom in the Indian IT services sector. Its knock-on effect would be felt in many other sectors, including in Higher Education, which, after working as a conveyor belt for IT services jobs, must find a new purpose altogether. However, these changes are bad for Indian companies, but not necessarily for the country.

This is one thing we should learn from China. The Trump-Biden restrictions on selling advanced chips to China created the Chinese 'tech stack'. It was not just the restriction on chips: The Chinese students were also barred from advance science and technology research programmes at the top universities. This hurt a lot of people and some companies (remember Huawei?), but China has turned the table in a few years. In fact, a Chinese friend told me that the Chinese policy makers now think that the US restrictions were a boon; without these, there would have been no incentive for the Chinese to change.

It will indeed be painful for India to adjust. Metropolises, Bengaluru, Hyderabad and the link, sprung up based on global trade flows. This is why it is so hard for Indians to adjust to the new reality. But also, within India, certain regions have gained over others because of globalisation, certain types of people and certain ideas emerged as winners. What comes next is a correction, which would hurt a lot of people. But the cat is now out of the bag - this is exactly what is going to happen. But these structural changes could be what India needs right now.

The standard economic theory of trade creating prosperity implicitly propagates that the benefits of that prosperity trickles down. This was the basis of globalisation, and the Indian middle class was a net beneficiary. But it was not the only option to develop the country. But these easy routes, labour arbitrage, crowded out all the other possibilities. India saw its young people as 'dollar mules', those who can be stuffed into desks twelve hours a day in dead end jobs to earn dollars for the country. But there were other ways to make their lives worthwhile: The call centre workers becoming teachers, if we value teachers and not let the dollar flowing into the country corrupt the terms of trade in Indian cities (i.e., not make everything super expensive), create more and long-term value for the country. No one investigated these so far, because they didn't need to.

I am hoping that the new H1B rules would start a wave of reverse migration. The returnees would start new businesses and change the faces of their cities, just as they did in Bengaluru after the global recession. The universities must stop selling unachievable dreams, companies will be forced to look for other jobs, and some smart people would decide to stay home. What China did to the chips, India would do it for its people, its greatest resource. There couldn't be a better opportunity to do the same.

Of course, there would be short-term pain. But is there a way to avoid it? The globalisation induced prosperity is over, and the sooner we accept it is better. But one good thing the Indian middle class will take away from its globalisation experience: Its optimism! This generation, and their parents, have seen that things can get better. This is very different from what the Europeans and the Americans have seen, as things got worse for the average citizen. So, even if disrupted, the Indians would look ahead and believe that they can create a future. Just as the Chinese has done! 

Now, let India be.