Editorial #1 The U.S.’s immigration blocks as a self-defeating path

The U.S.’s Immigration Blocks: A Self-Defeating Path and Lessons for India

Introduction

In an increasingly interconnected world, skilled migration plays a pivotal role in fostering economic growth, technological advancement, and job creation. The United States, historically a global magnet for high-skilled talent, particularly in STEM fields, is now facing challenges due to restrictive immigration policies. Research has consistently shown that limiting skilled immigration, especially through curbs on the H-1B visa program, does not protect domestic jobs but instead hampers innovation and economic dynamism.

For India, which contributes a significant portion of skilled migrants to the U.S., the evolving landscape presents both challenges and opportunities. The concept of “brain drain” is now evolving into “brain circulation,” where skilled migration fuels both the host and home economies. India must leverage this shift to position itself as a global leader in technology and innovation.

The Impact of U.S. Immigration Restrictions

1. The Fallacy of Protectionism in Skilled Migration

The prevailing argument behind tightening H-1B visa norms is that it would safeguard jobs for native American workers. However, empirical studies indicate that such policies have the opposite effect.

• Job Creation and Economic Growth: A study by Britta Glennon found that restricting H-1B visas does not lead to increased domestic hiring. Instead, companies relocate operations abroad to tap into foreign talent pools, particularly in countries like India and China.
• A 1% decrease in H-1B employment can result in a 10-20% growth in foreign affiliate hiring by U.S. multinational firms.
• For every 10 H-1B denials, firms hire 8 foreign workers overseas, leading to offshoring of innovation and job opportunities.

2. H-1B Visa Holders and the U.S. Economy

Contrary to the belief that H-1B visa holders displace native workers, research shows that they actually generate additional employment and contribute to economic expansion.

• Each H-1B visa holder creates 1.83 additional jobs for U.S. citizens over a seven-year period.
• Immigrant-founded firms attract higher investments and generate employment at a greater rate than native-founded firms.
• More than 50% of billion-dollar startups in the U.S. have immigrant founders, underscoring their role in technological and entrepreneurial advancement.

3. Wage Growth and Productivity Enhancement

Concerns about wage suppression due to skilled immigration do not hold under rigorous economic analysis.

• Wage Growth: Between 2003 and 2021, wages for H-1B workers grew by 52%, compared to 39% for all U.S. workers.
• A 10% increase in foreign STEM workers leads to a 0.5%-0.6% increase in native wages, as per the Journal of Labor Economics.
• Innovation Impact: A 1% increase in immigrant college graduates results in a 9%-18% rise in patents per capita, indicating significant knowledge spillover effects.
• In Silicon Valley, 71% of tech workers are foreign-born, demonstrating how skilled migration fuels innovation hubs.

4. The Risk of Losing Technological Leadership

Restricting high-skilled immigration risks eroding America’s competitive edge in technology and research. When visa policies become restrictive, companies relocate research and development (R&D) hubs to other countries.

• Canada, for instance, has capitalized on this by implementing liberal immigration policies, attracting top talent and tech investments that might have otherwise gone to the U.S.
• If the U.S. continues on this restrictive path, it risks not just losing talent but also exporting its innovation capacity to countries with more open immigration frameworks.

Lessons for India: From Brain Drain to Brain Circulation

India accounts for nearly 70% of H-1B visas annually, reflecting its dominance in global skilled migration. While concerns about “brain drain” have historically shaped policy discourse, there is now a shift towards “brain circulation,” where skilled migration fuels domestic innovation and growth.

1. Leveraging the Global Talent Network

Instead of merely being a supplier of skilled professionals, India must aim to integrate returning talent and diaspora expertise into its domestic ecosystem. Key steps include:

• Strengthening partnerships between global research institutions and Indian universities.
• Facilitating smoother reintegration for returning professionals through targeted funding, incentives, and infrastructure support.

2. Establishing Innovation Hubs

Rather than focusing solely on retaining talent, India must create an environment where global talent actively seeks to work and invest. This requires:

• Specialized Innovation Clusters with global R&D centers.
• Tax incentives and research grants to attract cutting-edge industries.
• Public-Private Partnerships (PPP) to bridge skill gaps and promote indigenous technology development.

3. Shifting from Catching Up to Setting Global Standards

India must transition from adopting global innovations to setting new paradigms in technology and governance. Examples such as India Stack and UPI demonstrate how the country can lead in digital infrastructure. Future focus areas should include:

• Artificial Intelligence (AI) and Quantum Computing.
• Renewable Energy Technologies.
• Space and Defense Technology.

4. Developing a Startup Visa Program

To attract global entrepreneurs and talent, India can introduce a startup visa program that:

• Provides streamlined pathways for foreign entrepreneurs to establish businesses in India.
• Facilitates cross-border venture capital investments.
• Encourages knowledge transfer through joint research funding and shared patent applications.

5. Modernizing Labour Market Policies

A key lesson from the U.S. experience is the need for adaptive, data-driven immigration policies. India can lead by:

• Implementing transparent wage determinations to ensure fairness.
• Introducing real-time analytics to match skills with opportunities, ensuring seamless integration of talent into the economy.
• Creating a fast-track visa processing mechanism for high-skilled professionals in critical sectors.

Conclusion: Embracing Talent Mobility for a Competitive Edge

Talent mobility should not be seen as a zero-sum game but as a dynamic process that benefits both sending and receiving countries. While the U.S. grapples with restrictive immigration policies, India must seize the moment to position itself as a global innovation leader.

Key strategies include:
 Building world-class innovation hubs that attract top talent.
 Moving beyond talent retention to active global participation in knowledge networks.
 Implementing nuanced, forward-looking immigration policies to attract global entrepreneurs and professionals.

By recognizing that skilled migration is a driver of growth rather than a threat, India can transition from being a talent exporter to a global innovation hub, setting new standards for the future.

Editorial #2 The Budget pipeline and India’s foreign policy ambitions

Budgetary Constraints and India’s Foreign Policy Ambitions

Introduction

Every year, the Union Budget captures public attention primarily in areas such as taxation, infrastructure, and defence. However, the budgetary allocation for the Ministry of External Affairs (MEA) deserves closer examination, as it directly impacts India’s global engagements and diplomatic efficacy.

Despite a 23% budgetary increase in the previous fiscal year, which was an exception to the modest 4% annual rise observed between 2017 and 2023, the MEA remains one of the least-funded ministries. With a budget utilization rate exceeding 96%, the constraints on funding not only limit India’s diplomatic reach but also its ability to deliver on global commitments.

As India aspires to achieve ‘Viksit Bharat’ by 2047, a robust diplomatic infrastructure and sustained global partnerships will be instrumental. India’s foreign policy priorities include:

• Leading the Global South,
• Strengthening ties with the Association of Southeast Asian Nations (ASEAN),
• Enhancing regional connectivity,
• Engaging with strategic partnerships such as the Quad (India, U.S., Japan, Australia), and
• Spearheading global institutions like the International Solar Alliance (ISA) and the Coalition for Disaster Resilient Infrastructure (CDRI).

Achieving these objectives necessitates an adequately resourced MEA that can meet the growing expectations of partner nations and global stakeholders.

Budgetary Constraints and Their Impact on Foreign Policy

1. The Growing Expectations from India’s Diplomacy

India’s increasing geopolitical stature has elevated expectations from partner countries. These nations anticipate:

 Timely implementation of bilateral and multilateral projects,
 Adequate financial backing for cooperative initiatives, and
 Strong diplomatic engagement and follow-through.

However, the MEA’s current allocation stands at just 0.4% of India’s total budget, significantly lower than required to meet these commitments. In 2022, the Parliamentary Standing Committee on External Affairs recommended increasing this to 1%, but even a gradual enhancement to 0.6%-0.8% would signal greater strategic intent.

2. Strategic Priorities Demanding Increased Budgetary Support

Two critical areas require enhanced financial allocation:

A. Economic Diplomacy and Regional Integration

India’s regional outreach has encountered new complexities in 2024, including:

• Political transition in Bangladesh,
• Continuing instability in Myanmar,
• Strained relations with Nepal, and
• The “India Out” campaign in the Maldives.

At the same time, engagements with Sri Lanka and Bhutan have strengthened, reinforcing commitments to cross-border infrastructure projects. Sustaining diplomatic momentum under the Neighbourhood First policy is vital, particularly as China expands its economic and strategic footprint in South Asia. Enhanced financial backing is necessary for initiatives such as:

• Connectivity projects (roads, railways, energy grids),
• Trade facilitation measures, and
• Developmental assistance programs.

B. Strengthening Institutional Capacity within MEA

To enhance India’s global standing, the Indian Foreign Service (IFS) must be expanded and equipped with better resources. Key areas needing reform include:

• Human Resource Development: The IFS remains one of the most understaffed diplomatic corps among major global powers.
• Research Ecosystem: A strong knowledge base, supported by Indian universities and think tanks, is essential for informed policymaking.
• Training and Specialization: The MEA’s training budget saw a 30% increase in 2024-25, but this remains insufficient given the rising complexity of international diplomacy.

Foreign Aid Trends: A Shift in India’s Assistance Approach

India’s global development assistance plays a significant role in its diplomatic engagements. However, in 2024-25, there was a 10% decline in direct aid to foreign countries, while loans to foreign governments increased by 29%. This shift from outright grants to Lines of Credit (LoCs) reflects a strategic move towards sustainable financing models.

1. Key Trends in India’s Foreign Aid

• Bhutan remains the largest recipient, underscoring deep historical ties and emerging energy interdependence.
• Aid to Bangladesh decreased from ₹200 crore in 2023-24 to ₹120 crore in 2024-25, despite its strategic importance.
• Sri Lanka saw a 63% increase in budgetary allocation, signaling India’s commitment to stabilizing the island nation’s economic recovery.
• 45% of LoCs are directed towards South Asia, with Bangladesh being the largest recipient ($7.86 billion).

2. Challenges in the LoC Model

While LoCs facilitate long-term infrastructure development, they require efficient disbursement and robust oversight mechanisms. Without these, bureaucratic delays and financial inefficiencies could undermine India’s diplomatic influence. A well-resourced MEA is critical to ensuring effective implementation and monitoring of these projects.

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Expanding India’s Global Presence: Missions, Cultural Diplomacy, and Soft Power

1. Strengthening Foreign Missions and Cultural Diplomacy

• In 2023-24, budgetary allocation for foreign missions, diplomatic training, and cultural diplomacy increased by only 7%, insufficient to meet rising operational demands.
• Key academic institutions like Nalanda University and South Asian University saw funding cuts of 20% and 22%, respectively, affecting India’s higher education diplomacy.
• While India has hosted several high-profile international conferences, greater investment is required to sustain policy-relevant research at Indian universities and think tanks.

2. Addressing Institutional Deficiencies in the IFS

• Coordination challenges, delays in expansion, and limited lateral entry into the IFS continue to impede progress.
• There is an urgent need to recruit specialized domain experts in areas such as climate diplomacy, digital governance, and international trade.

A structured plan for diplomatic expansion—including new foreign missions, greater linguistic training, and advanced negotiation capabilities—is imperative.

Conclusion: Strengthening Diplomatic Infrastructure for India’s Global Aspirations

External Affairs Minister S. Jaishankar has emphasized that “Track 1 diplomacy (government-level negotiations) has consistently outpaced Track 2 diplomacy (scholarly and strategic research).” Bridging this gap requires the MEA to proactively support research, institutional memory, and policy foresight.

Key Reforms Needed:

1. Declassification and Digitization of Diplomatic Records

1. Facilitating public e-access to historical archives will enable scholars to critically analyze India’s foreign policy evolution.
2. A digitized knowledge base will provide policymakers with data-driven insights for better decision-making.
3. Strategic Budget Expansion

2. Increasing the MEA’s budget allocation towards 0.6%-0.8% of the total expenditure would allow India to meet its diplomatic commitments effectively.
3. Priority must be given to regional connectivity, institutional capacity, and multilateral engagements.
4. Investing in Diplomatic Capacity

3. Expanding the IFS, improving training programs, and enhancing research collaborations with think tanks and universities.
4. Strengthening India’s soft power initiatives through education, culture, and global partnerships.

Final Thoughts

India’s aspiration to be a global leader is contingent on a well-funded, well-equipped, and strategically aligned diplomatic framework. Adequate budgetary support for the MEA is not just an administrative necessity but a geopolitical imperative. By aligning financial allocations with strategic ambitions, India can fortify its diplomatic outreach, enhance regional influence, and emerge as a key architect of the global order in the 21st century.