Protectionism looms, India must innovate

With new thinking gaining ground in Donald Trump’s America, and many First World countries now putting greater emphasis on protectionism, Indians have to learn to deal with this paradigm shift, and accept the reality that they won’t find it so easy to migrate to more prosperous economies. But more than aspiring emigrants, India’s infotech companies must reconfigure their business models to stay relevant in countries their outsourcing and offshoring businesses are tied to. Instead of railing against the closing of doors, the IT industry must prepare to work along different paths to mitigate the problems posed by restrictions on the US H1-B and similar programmes by which firms could flood the lotteries to try increase their chances of securing work visas to service US clients on-site.

Immigration was one of Mr Trump’s key campaign planks and his administration has focused on this issue in a major way. Although there’s no definitive legislative action yet, the executive has moved to curb the issuance of visas. Finance minister Arun Jaitley, at a Washington meeting with US commerce secretary Wilbur Ross, noted that the H1-B programme had more to do with trade ties, and shouldn’t be mixed up with US attempts to curb migration, which is its right. He was told that only a review process had started, with no final decision yet. But it does appear that India will be up against a US wall over negotiating visas for highly-skilled technologists, as the emotive issue is to do with jobs in America, which Mr Trump has vowed will be for Americans first.

This rightward swing has been visible in US and Europe for some time, with protectionism gaining ground. Now Australia has followed the US in curbing work visas and citizenship applications, with PM Malcolm Turnbull hard-pressed to tackle sagging popularity ratings. In its Brexit vote, the UK displayed essentially isolationist behaviour. New Zealand has declared it will be “Kiwis first” in terms of jobs, in effect shutting the doors on immigration. Beyond the migration issue, protectionism doesn’t portend well for emerging markets, which have necessarily to push for exports at a time when the global economy is seen to have recovered from its 2008 lows.

India faces a double whammy as a rising rupee is also hitting its exports, on top of its $150-billion IT industry facing a fundamental crisis. Indeed, the headwinds are strong, calling for more innovation from India’s huge IT and manufacturing talent pool.