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As long as India will enjoys the comparative cost advantage, no power in the world can block its road to success. According to the latest report of OECD, India will surpass the US by 2020; the report reveals that it is expected to produce 12 per cent of graduates in the world by the end of this decade. On the other hand, the demands of the US economy are increasing too rapidly for it to be met by an insufficient pool of qualified and skilled local human resource.
India has a vast reservoir of young, educated and skilled talent that is ready to meet the demands of US businesses at substantially lower cost.
Back to basics Those who are apprehensive that Donald Trump’s presidency could negatively impact India’s trade and commerce with the US, especially the IT and healthcare outsourcing sectors, are ignoring the basic principles of economics that are more influential than the whims of a politician.
Trump is a businessman first, and then president of the US: nothing can induce him to act against a scenario which is mutually beneficial to both the countries. Outsourcing will continue because the world is getting more competitive. It is now more flat than when Thomas Friedman wrote his eponymous book over a decade ago. The question is: how will it change and what will India’s role be?
Gone is the era of protectionism. Businesses don’t expand in isolation, they demand open environment and liberal policies: policies that produce results, not conflicts. What Trump said during the election campaign was not all negative. And he knows the value of India and worth of Indians in the world economy.
If he increases the H-IB visa limit to $130,000, the onshore presence of Indian workers will decline, but it will ultimately boost the offshore units in India that are well-equipped with telepresence solutions such as Google Glass, efficient ERP systems, etc. And these off-shore companies will be able to hire quality employees at lower wages. That means fewer people will go from India; this will reduce brain drain to the US and these people will benefit the home country with their knowledge and intellect. Also, the cost of hiring will be lower for offshore units because of limited onshore opportunities, and it will bring more stability in the system; a win-win situation for India in both scenarios.
On the positive side We shouldn’t forget that on many occasions Donald Trump didn’t hesitate to praise India: “I have great respect for India. It’s an amazing country”, and “The world’s largest democracy and a natural ally of the US”. These are some of his statements. He has expressed his desire to strengthen relations between the two countries. As he has said, “Under a Trump administration, we are going to become even better friends, in fact, I would take the term better out, and we would be best friends... We are for free trade. We will have good trade deals with other countries. We are going to do a lot of business with India. We are going to have a phenomenal future together.”
If we analyse Trump’s ‘Buy American, Hire American’ slogan, we will find that perhaps it was misinterpreted by a majority of people due to an over-assertive tone. In fact, he wants to save those businesses and jobs in the US where Americans are potentially ahead of others in terms of both resources and cost. As for IT or healthcare outsourcing, the US is neither equipped with substantial human resources, nor is the cost of business operations in these sectors favourable for America.
History has proven many times that trade is stronger than politics. It is the trade interest of two nations that decides bilateral ties and foreign policy.
Globalisation cannot be reversed. We all are interdependent, and no country is 100 per cent self-reliant: the sellers are also consumers. India enjoys the population dividend, the quality of education is improving, and the infrastructure is far better than many Afro-Asian countries.
Moreover, the mutual interests of the two nations will never allow President Trump to adopt stringent policies against India.
The writer is the director of AIG Business Solution
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