CEA Interview: Indian Diaspora Should be Seen as 'Brain Bank' Rather Than Brain Drain

Many businesses that once relocated for tax purposes have now moved back. We noted this trend in the January 2023 Economic Survey, and today it is no longer a major concern as we have seen reverse migration of businesses happening towards India.

Regarding the global economic order, long-standing assumptions—such as free trade, unrestricted capital flows, and the absence of industrial policy—are making way for more pragmatic, context-driven approaches in developed economies. Previously, when such policies were followed (or not), India’s economic size and influence were relatively smaller.

Now, with developed nations shifting away from their earlier stance and India’s economic strength growing, the country has a chance to shape global policy narratives—not just for itself but also for the broader developing world. However, India’s unique position, with its scale, democratic framework, and federal structure, makes this task more complex. The country must carve out a policy path suited to its distinct needs.

I agree, and I think we are doing that. We should see them as a "brain bank" rather than a brain drain. This shift is happening both through policy initiatives and their natural cultural and professional ties to India. Many collaborations are happening, including the semiconductor mission. And the fact that mobile phone electronics has moved to India, in certain ways, the diaspora has contributed to some of these developments. So, it is not as if it has not yet started in India. It has been happening and will continue to happen.

I do not think it is a win-lose situation. It can be a win-win. Given India’s demographic strength, there is ample talent for both domestic growth and global participation. The diaspora serves as a "brain bank," as I said, fostering knowledge exchange. Capital and talent naturally flow where opportunities arise, a pattern seen across centuries. Rather than viewing it as a concern, it should be welcomed for the perspectives and expertise it brings back. At the same time, India has enough homegrown talent to drive its own progress.

It is difficult to provide causal explanations off the cuff, as multiple factors could contribute to such phenomena. Reducing a complex issue to a simple explanation would not be accurate. One possible factor could be the lack of necessity for long-term thinking in a country where demand remains consistently high due to its large size.

However, to be globally competitive—especially with security considerations becoming more relevant—domestic resilience must be developed. This changing context calls for strengthening domestic R&D, viewing it as an investment rather than expenditure. Additionally, the Indian academic environment has the potential to contribute much more than it has so far.

A few days ago, there was a detailed media report on how some American businesses have shifted focus away from innovation, prioritising quarterly earnings instead. There are many successful companies that allocate up to 5 per cent of their sales to R&D.

It is all about the horizon over which you seek to maximise your returns. This issue is not unique to India; globally, corporate leadership often operates on shorter cycles, while R&D payoffs take much longer. Bridging this gap requires a combination of visionary thinking, strategic board-level decisions, and a long-term approach to R&D investment.

Naturally, industry challenges become research questions for academia. While problem-solving research is essential, we also need blue-sky thinking—innovation driven purely by human creativity, without an immediate practical application. Both are necessary. Original research pushes boundaries, while applied research addresses pressing issues like nutrition, pollution, groundwater recharge, urban waste management, land fertility, and air quality—such as the stubble burning problem affecting Delhi’s air in November and December. Collaboration is required in these areas.

Innovation is driven by various factors, including academia, R&D, access to advanced equipment and chemicals, and the movement of trained scientific personnel across borders. Regulations influence both innovation and business operations. In India—at both the state and union levels—significant progress has been made, but given the country’s scale, there is still much to be done.

Some sectors have advanced, while others have received less attention due to various reasons. The focus is on identifying these gaps and bringing them into policy discussions, which is precisely what the Economic Survey seeks to achieve.

In December, as widely reported, the Honourable Prime Minister convened a conference with the Chief Secretaries of all states, personally attending the proceedings for two days. This platform facilitated extensive information sharing, allowing states to observe how regions like the South, West, and parts of the North attract businesses and foster a business-friendly environment.

The Economic Survey highlights that the Business Reform Action Plan (BRAP) strongly correlates with higher levels of industrial activity—demonstrating that states actively implementing BRAP see tangible economic benefits. Such evidence serves as an incentive for states to enhance their own business ecosystems.