As President Donald Trump builds his political future on the American backlash against globalisation, Delhi has no reason to insist that it has the “right” to export cheap technical labour to the United States. Nor should the government want to make this question central to its planned engagement with the Trump administration.
As it waits to see how the political dynamic on H-1B visas plays out within the US, Delhi must find ways to manage the problem in the immediate term, encourage its IT industry to adapt over the near term and craft a longer-term strategy to modernise its interdependence with Silicon Valley. As Trump discards the ideology of free trade, restricts in-sourcing of labour into America and outsourcing of jobs, and builds new walls along America’s borders, India is not the only one concerned. Other Asian countries with more intensive economic and political relations with the United States face much bigger challenges and are trying to cope, each in its own way.
China has a massive trade relationship (annual turnover of nearly $600 billion in 2015) with America. Trump has focused his ire on the huge trade deficit with China, of nearly $400 billion. He has accused Beijing of stealing American jobs and has threatened to impose a 45 per cent tariff on imports from China. To put some additional political pressure on Beijing, Trump has put Taiwan and Tibet back in political play.
If Chinese leadership had expected that Trump would change his tune after the elections, it was in for a big surprise. Beijing has now hunkered down to focus on devising appropriate responses to the Trump challenge. It has made some noise about economic retaliation, cautioned Washington against launching a trade war and warned Trump not to question China’s territorial integrity. Beijing would also want to see if there is room for negotiating a larger deal with Trump.
Meanwhile, China’s Jack Ma, who runs the e-commerce firm Alibaba, rushed to meet Trump, even before he was sworn in. Ma told Trump he’d invest “bigly” in America to create a million jobs. Not everyone on Trump’s team may be convinced, but Ma laid out the hope that China can help Trump achieve his top domestic priority — bring some jobs back to America.
Trump is also putting pressure on other Asian businesses to increase their investments in the United States. In a tweet last week, Trump told South Korea’s Samsung company, “we would love to have you”. Triggering the tweet was a media report that Samsung was mulling a decision on building a new electronics plant in America. Samsung was mortified that Trump was thanking them in public even before they had actually decided on the investment, but could not take the liberty of denying the president’s claim.
Japan has even bigger stakes in managing the US relationship than China and Korea. Prime Minister Shinzo Abe was the first foreign leader to show up at Trump Tower last November, barely a week after election day. Abe had good reasons to rush. Trump was at the forefront of Japan-bashing on economic issues in the past. During the campaign, he criticised Japan for not doing enough in return for the benefits it derives from the military alliance with the US. If the November visit was about finding a personal connect with Trump, Abe’s pilgrimage to the White House this week is about demonstrating Tokyo’s commitment to addressing the new President’s concerns.
Reports from Tokyo say Abe will present Trump an investment package of $150 billion to create nearly 700,000 jobs in the United States. The areas covered are said to include the modernisation of America’s urban infrastructure, construction of a high-speed railway in California and the North Eastern states, and promote cooperation in space exploration, cyber security, robotics and artificial intelligence.
While Japan is eager to expand engagement with the US in the digital domain, Delhi has not fully leveraged growing interconnections between India’s technology hubs in Bengaluru and Hyderabad on the one hand and Silicon Valley on the other. The movement of skilled labour with H-1Bs from India to the US has only been one part of this integration.
Well before Trump, there has been mounting pressure against the H-1B visa system from both Democrats and Republicans. The political heat from the US had convinced many Indian tech companies that their business model must reduce the reliance on getting visas for in-situ work in America. That should not be impossible, even as Delhi limits Trump’s immediate disruption.
What is more important over the longer term is to devise a policy framework that fully utilises India’s manpower advantages, leverages the size of its market and facilitates rapid growth in the nation’s technological capabilities through indigenous innovation and international partnerships.
An India that grows its domestic capabilities will be in a better position to address American concerns about jobs at home and benefit in turn from the current US lead in most advanced technologies like robotics, artificial intelligence and biotechnology.