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By Srinath Sridharan Dec 21, 2022 10:24:10 AM IST (Published)
Indian students going abroad for their higher studies costs India a foreign exchange outflow of USD 10 billion annually. In addition, over the past few decades, lakhs of Indian scientists, doctors, engineers and qualified persons have migrated out of India.
The UK-India Free Trade Agreement (FTA), which had stalled earlier this year because of political instability in the UK, is now back on track. The then short-tenured UK home secretary expressed reservations over a relaxation through the trade pact and had claimed Indians were the “largest group of people who overstayed”.
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This created a trust issue and delayed the Diwali-2022 schedule to get the FTA agreed on. Recently, the Indian Commerce and Industry Minister Piyush Goyal and his British counterpart Kemi Badenoch held the sixth round of discussion on the same.
Issues at Hand
Free trade pacts between two countries or regions essentially reduces or eliminates duties on a maximum number of goods and services traded between them. Hence tough negotiations between the parties are naturally one of the most important elements of the process.
The FTA talks between India and UK had been stalled over multiple issues, including a purported Indian demand for greater number of student visas and the political and economic turmoil in the UK. In addition, any pact will also have to deal with factors such as data localisation and data security. The UK is also reportedly demanding changes in India’s patent regime to make it adjust to its current patent regime.
The India-UK trade has a large contribution by services sector, which makes up nearly 70 percent of the overall annual commerce. The FTA is expected to double the bilateral trade of both goods and services to about $100 billion by 2030.
Given the size and growth potential of the Indian economy, this FTA is a long-term economic opportunity for the UK, compared to others with whom it’s closing on (like with Australia, etc) at present. The UK has a deep interest in wanting to secure greater market access for a wide range of services providers, ranging from lawyers to architects, builders, accountants and consultants, who cannot easily trade cross-border because of Indian regulations (including legal establishment, corporate form, nationality, board composition, employee quotas, etc). No wonder, it is pushing for relaxations in these to open opportunities for its entities to enter the lucrative, and importantly fast-growing services sector. There lies another major concern-- a potential issue of brain drain.
Visas & Brain Drain
A services sector corridor that can thrive well assumes the ability of professionals to travel between the two nations with ease. No wonder, the visa access is an obvious ask. India has always pressed for visa access in its trade negotiations. In addition, India would want the UK to increase visa categories for Indian, and to reduce current obligations on social security contributions. As a bilateral negotiation, it is fair to expect reciprocity in many aspects including visa regime relaxation.
India has also been receiving a large share of UK visas for skilled-migrants. Indians in the UK have received more sponsored expert employee visas than people of other nationalities, with the majority going to those in the IT and healthcare industries. Over 1.15 lakh Indian students received UK student visas in the year through June 2022. Under the Migration and Mobility Scheme, up to 3,000 Indians between the ages of 18 and 30 are allowed to work in the UK for two years.
India's push for the UK skilled visas is to find newer markets for its skilled population. As a populous nation, it would need to continuously open various global markets for its talent to find employment. However the biggest challenge this will open is the drain of talent migrating to greener pastures.
How do we balance need for newer market access and brain drain?
According to Oxford Advanced Learner‟s dictionary, Brain Drain is “the movement of highly skilled and qualified people to a country where they can work in better conditions and earn more money”. Brain drain is usually regarded as an economic cost, since emigrants usually take with them the fraction of value of their training (education , skills, lifetime contribution to the economy). This also leads to reduced economic growth, limited innovative capacities and lack of skilled manpower.
Indian students going abroad for their higher studies costs India a foreign exchange outflow of USD 10 billion annually. Over the past few decades, lakhs of Indian scientists, doctors, engineers and qualified persons have migrated out of India.
Will some of these services-focused FTAs create path for our population to migrate globally for employment ? The answer is yes.
When our brightest minds leave our country to study and stay back, we further worsen the ‘knowledge gap’ in the society. Of course there are many factors why youngsters leave a country - higher quality education available elsewhere, employment and entrepreneurial opportunities, better quality of life and living, predictable citizenry benefits offered by developed nations, lesser chaos than seen in a developing nation like ours.
There are many academic research done on the economic cost of brain drain, and the familial impact it leaves on remaining family who stay back in India. These effects include but are not limited to:
We have seen how we had a generation of brain drain in the 70s to the early 90s. Do we want to repeat that? Today’s India has better economic opportunities than those gloomy period. However, we also have the challenges of employing our 800 million productive aged talent - be it skilled or unskilled. That’s where any opportunities of brain drain is a cause for worry.
— The author Dr. Srinath Sridharan is a Corporate Advisor & Leadership Coach. The views expressed are personal.
Read his earlier articles here
(Edited by : CH Unnikrishnan)
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