Special report | The diaspora

The worldwide web

India should make more of a valuable asset abroad

PART OF THE secret of China’s success in the past four decades or so has been the clever use of its diaspora. Chinese manufacturers in Hong Kong who had long supplied American partners moved to the mainland and set up factories. Chinese nationals who succeeded abroad brought home trusted contacts, networks, experience, standards, technology and capital.

India could do with more of that. Over 27m people of Indian origin, including some temporary migrants, live overseas, many of them in the Gulf. They remit $70 billion a year to their home country, more than any other group of expats. That adds up to 3.5% of India’s GDP, outstripping foreign direct investment.

The biggest potential lies with the diaspora in the West. Mr Modi seems to be aware of that. He has been courting it on visits to America, Australia, Germany and Canada, holding big rallies. Indians abroad heavily backed him in last year’s election, sending millions of dollars as well as people to help. Even in remote corners of Uttar Pradesh, your correspondent bumped into jovial volunteers with American accents.

Indians in America are the most promising. They are increasingly prominent in tech companies, on Wall Street and in government, especially in the state department. Around 1% of America’s population, over 3.3m people, are “Asian Indians”. Perhaps 150,000 more arrive each year, and 90% of them stay permanently. Devesh Kapur, who has studied them, talks of a “flood”. He says over half of all Indian-born people in America arrived there after 2000.

On the usual measures of success they outstrip all other minorities, including Jewish-Americans. They are educated and rich. In 2012 some 42% held first or higher degrees; average family income was over $100,000, roughly double that of white Americans (see chart). Over two-thirds of them hold high-status jobs. They have done so well that many migrants from Pakistan or Bangladesh like to call themselves Indian, hoping that some of the stardust will rub off on them.

The stereotype of Indians as keeping shops or running motels in their adopted country is thus outdated. An IT professional from Andhra Pradesh would be far more typical. Since the turn of the century America has slurped in highly skilled graduates as fast as India can produce them. America’s H-1B employment visa for skilled professionals tells the story. In a book under review by a publisher, provisionally entitled “The Other One Per Cent”, Mr Kapur and his co-authors note that between 1997 and 2013 half of those visas went to Indians. Since 2009 the share has been more than two-thirds. Some 30,000 Indians a year also arrive in America to study, and many stay to work.

Exporting all that talent could hurt India, which lacks skilled workers. Mr Kapur says that some 91,000 Indian-born people with PhDs are now living in America. This suggests that India is failing to create the right conditions to retain high-fliers. But it is also an opportunity to deepen its ties with the West.

This has proved useful before. The 1990s boom in IT created a $100 billion industry in India as staff of Indian origin working in Western companies persuaded their bosses that they had the contacts and cultural understanding to be able to set up in their home country. Indians returning from work or study in America helped found big IT companies like Wipro and Infosys. The same diaspora could act as a bridge for other entrepreneurs now. And a wealthy diaspora should be a big source of tourism and capital, notes Sanjay Puri, chairman of USINPAC, the main political lobby for Indian-Americans in Washington.

Mr Puri points to plans for an infrastructure bond to be sold to members of the diaspora. One model for this could be a bond for building Cochin airport, in Kerala, to which nearly 10,000 Indians abroad contributed. “A highly successful community is looking to engage back again,” says Mr Puri.

Although most of the diaspora are social conservatives, they typically back the Democrats

The Indian diaspora also influences American domestic politics (Indians talk of emulating the Jewish-Israeli lobby). Its members are becoming bigger donors, and although most of them are social conservatives, they typically back the Democrats because Republican Christian evangelism makes them uncomfortable. Shivshankar Menon, the former national security adviser, credits the diaspora with lobbying America’s Congress to approve a civil nuclear agreement with India a decade ago.

The diaspora will not fix India’s problems, but it should help to reinforce success. An Indian who has done extremely well from making garments in China, Bangladesh and Vietnam says that for the moment he would not dream of setting up in his home country because he worries about the quality of manufacturing and the work culture there. But if things were to change, he would be ready to move quickly.

This article appeared in the Special report section of the print edition under the headline "The worldwide web"

India’s one-man band

From the May 23rd 2015 edition

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