India is increasingly sending its skilled workforce abroad through labor mobility agreements with various nations, a strategy driven by domestic employment challenges and the rising significance of remittances amidst global anti-immigration sentiment.
New Delhi — Over the past decade, the global labor market has witnessed significant shifts, with countries like China reversing their brain drain by attracting skilled workers back home. In contrast, India is pursuing a different strategy by facilitating the movement of its vast young workforce overseas. This week, experts analyzed India’s growing network of labor mobility pacts with several trading partners, despite a notable rise in anti-immigration sentiment worldwide.
From Europe to New Zealand, and from Russia to the Middle East, India has established labor mobility agreements as part of its recent trade negotiations. The country, which boasts one of the largest working-age populations globally, is facing a lack of opportunities for highly skilled labor domestically. This situation, coupled with India’s increasing reliance on remittances—amounting to roughly 3% of its GDP—has prompted the government to seek avenues for its workforce to work abroad.
Employment Challenges in India
India’s unemployment rate has remained between 5% and 6%, a figure that does not reflect the broader context of underemployment. “If we add under-employed people, the rate jumps up alarmingly,” noted Jayant Krishna, senior fellow and chair on India and emerging Asia Economics at the Center for Strategic and International Studies, in an interview with CNBC. By facilitating the migration of skilled and semi-skilled workers, India aims to manage the aspirations of its ever-expanding working-age population.
Experts have emphasized that remittances play a crucial role in the Indian economy. As the country receives the highest amount of remittances globally, the funds sent home by overseas workers are becoming increasingly vital for India’s financial stability.
Rising Opposition to Mobility Pacts
Despite the economic rationale for these mobility agreements, they are not without opposition. As anti-immigration sentiments rise globally, some domestic voices in countries like New Zealand are expressing concerns. Recently, New Zealand’s Prime Minister Christopher Luxon praised the country’s free trade deal with India, which enhances labor mobility for Indian workers. In a speech to the Indian diaspora in Auckland, Luxon acknowledged the economic, social, and cultural contributions of Indian migrants.
However, the deal faces significant opposition from coalition members of Luxon’s government. Foreign Minister Winston Peters criticized the trade agreement, expressing concerns over “unprecedented immigration settings” that he believes will make it more difficult for New Zealand residents to find jobs. Previously, Shane Jones, a minister in the Luxon government, raised alarms about a potential influx of Indian workers, describing the agreement as leading to a “butter chicken tsunami” in New Zealand.
In Australia, where India has recently overtaken England as the leading country of origin for overseas-born residents, Prime Minister Modi’s visit also sparked protests against Indian immigration. Some demonstrators voiced their discontent, with claims that “this country is for Australians,” reflecting a growing trend of resistance to immigration.
U.S. Immigration Policies Impacting Indian Workers
In the United States, a significant recipient of Indian labor, visa regulations are tightening. As negotiations for a trade deal with India continue, the U.S. has implemented changes that may limit the pathways for Indian workers. The H-1B visa program, established in 1990, has been a crucial avenue for highly skilled workers in the tech sector. However, the Trump administration had aimed to reduce reliance on this program significantly.
Ronak D. Desai, a visiting fellow at Stanford’s Hoover Institution, remarked on India’s lesson drawn from U.S. immigration politics, stating, “do not leave your diaspora’s access to foreign labor markets hostage to another nation’s domestic politics.” He further pointed out that treaties establishing labor mobility are more stable than unilateral visa policies.
Contrasting Approaches: India and China
India’s proactive approach to exporting labor contrasts sharply with China, which has successfully encouraged a return of skilled workers over the past decade. Geopolitical tensions have influenced this trend, leading to significant numbers of Chinese professionals returning home, a phenomenon referred to as “Haigui,” meaning “returning from across the sea.”
Experts note that China has developed its capabilities to absorb this talent, particularly in sectors such as semiconductors and biotechnology. Rafiq Dossani from the RAND Corporation emphasized the importance of portable skills in aiding China’s technological progress. In contrast, India has not created similar opportunities for advanced technological development, expending only about 0.5% of its GDP on research and development, notably lower than the global average.
Pramit Chaudhuri, head of the South Asia practice at Eurasia Group, indicated that the Indian government does not perceive “brain drain” as a major concern, suggesting instead that it is actively promoting labor mobility as a strategy for economic growth.
Conclusion
As India navigates these complex dynamics, its focus on expanding labor mobility agreements reflects a broader strategy to address domestic unemployment while leveraging the economic benefits of remittances. The implications of this approach will continue to unfold amid shifting political landscapes both domestically and internationally.
