Sunanda K. Datta-Ray | Trump Targets India: End to the Biggest Brain Drain?

If US President Donald Trump’s brutally sudden fiat isn’t just a bargaining ploy, it has cut short what could have burgeoned into the biggest brain drain in history, affecting one million Indians and more than 70 per cent H-IB visa holders. Even without this sudden cut-off, dismay and disappointment may have awaited India’s leaders who expected Artificial Intelligence to bring untold opportunity without realising the daunting challenge it presented to a nation where the “India Skills Report 2025” found that only 58.4 per cent of local graduates are fit for employment.

Nowhere else in the world will 15,75,760 sturdy young men scramble for 4,543 jobs, as witnessed recently in chief minister Yogi Adityanath’s Uttar Pradesh, said to be the pointer to India’s future. Indian politicians must be re-educated and retrained as AI’s high demands reduce the number of vacancies.

The repetitive stress on “Digital India” exposes their naivete. India’s education system must acquire the ability to retrain workers and enable them to transition to the new roles that will be created. India's manufacturing sector has traditionally been labour-intensive, with a large number of low-skilled and semi-skilled workers in the textiles, automobile, and electronics industries. However, the advent of automation technologies like robotic process automation, AI-powered machinery, and 3D printing is reducing the demand for manual labour, especially in assembly-line tasks.

There is little room for complacency. A report by the McKinsey Global Institute estimates that automation could displace up to 60 million workers in Indian manufacturing by 2030, particularly impacting jobs in textiles and electronics.

The IT and services sectors, which are integral to India’s growth story, are also undergoing significant transformations. While India has been a global hub for IT services, the automation of basic IT tasks (such as coding, testing and system maintenance) is reducing the need for entry-level jobs.

India’s vast informal workforce is particularly vulnerable to disruptions. As we saw during the Covid-19 pandemic, thousands of men and women on flexible employment terms and without formal job contracts or social security are the first to be displaced and face the most severe challenges in coping with the transition. Approximately 90 per cent of India’s workforce is employed in the informal sector, which is especially susceptible to automation, as these workers often lack access to retraining programmes and support systems.

A World Bank report warns that rural-to-urban migration is expected to increase as automated jobs grow in cities, leading to urban congestion, a shortage of accommodation, rising demand for schools, transport and other urban facilities, as well as pressure on all forms of infrastructure.

Without targeted policies, automation may lead to greater rural-urban migration and intensify uneven development, widening the great divide between town and country.

Agriculture remains India’s largest employer -- supporting approximately 47 per cent to 60 per cent of the population, and the adoption of AI and automation in agriculture would undoubtedly mean more efficient practices, reducing waste and increasing yields. This reliance makes agriculture a cornerstone of the country’s economy, and agricultural reform could improve the social and economic status of between 42.3 per cent and 47 per cent of Indians, especially since the 2011 Census noted that 54.6 per cent was engaged in agriculture and allied activities. Low-skilled workers are more vulnerable to job losses, while those with advanced technical skills are likely to benefit which could widen the income gap and deepen socio-economic divides.

Not that the future is entirely bleak. India's demographic dividend -- the growth potential from its high proportion of working-age people (15-64 years) compared to dependents -- began around 2005-2011 and is expected to last until 2055, peaking around 2041. Properly managed, this presents a window for growth through increased productivity, savings and consumption, but realising this potential requires addressing challenges like a widening skills gap, ensuring employment, and leveraging the increasing pool of female STEM (Science, Technology, Engineering and Mathematics) graduates. As this column has noted before, India has the world's largest youth population and a significant pool of STEM graduates, providing a skilled workforce for industry.

This favourable age structure can fuel economic growth by increasing the labour force, boosting savings and investment, and increasing consumption. This demographic window started between 2005 and 2011, and is expected to last for several decades, until approximately 2055 but peaking around 2041, when the proportion of the working-age population will be at its highest.

A larger workforce can drive economic expansion, with growth potential in manufacturing, services, IT, and healthcare sectors. Much depends, however, on bridging the significant gap between the skills offered by India’s archaic education system and the requirements of the evolving job market. Investing in skill development and aligning educational curricula with future job demands is crucial to avoid a “demographic time bomb”. A supportive policy environment, including good healthcare, decent employment opportunities, and gender empowerment, is essential to harness the dividend but they all demand investing far more in human welfare instead of extravagant fancy projects to which the Prime Minister’s name can be attached.

This is not beyond India which is already the world’s largest exporter of manpower. More than 30 million Indians fled these shores and settled abroad because the motherland could not offer them a decent living. Even the external affairs ministry admits that a record 225,620 Indians renounced their citizenship in 2021. Between 120,000 and 140,000 Indians migrate annually, belying the National Sample Survey’s claim that the unemployment rate for urban individuals aged 15 and more has fallen to 6.8 per cent from 8.2 per cent a year ago.

“If the bitter truth be told”, says West Bengal’s former finance minister Amit Mitra, “47 million people were unemployed, mainly youths, during the festive month of October 2023”. He adds that youth unemployment hit a record high 23.22 per cent when the comparable figures for Bangladesh and landlocked and resource-poor Bhutan were only 12.9 and 14.4 per cent. Yet, it has always been our pride that with half of India’s 1.4 billion people aged below 25 (65 per cent being under 35), the “youth dividend” gives India a huge advantage over China.

Who will benefit most if education is improved to serve AI? Not India, at least not in the immediate future. The beneficiaries will be countries that can best use the new skills and technology. That’s what the brain drain is all about, and it’s not clear yet whether President Trump is seriously trying to belittle India’s prospects or preparing the ground for some tough bargaining on a trade pact.