Germany’s Labour Minister Hubertus Heil recently told reporters that Germany will face an acute shortage of seven million workers by 2035. Europe’s industrial powerhouse also saw as many as 6,30,000 unfilled job vacancies in 2022 according to the German Economic Institute.

Consequently, the Bundestag is soon expected to pass sweeping immigration reforms that will make it easier for foreign nationals to work and reside in Germany. On a similar vein, Jake Sullivan, National Security Adviser to US President Biden recently remarked that America’s ability to attract and retain the world’s best talent will be crucial for the US to maintain its global lead in critical technologies like semiconductors and artificial intelligence.

Japan is also shunning its historic reluctance to immigration as it unveiled two visa schemes in April to expedite the entry of skilled immigrants.

Contrary to the anti-immigrant rhetoric that recently swept the world, industrial economies are increasingly waking up to the fact that immigration will be necessary for their long-term economic growth, and are intensely competing to attract foreign talent. The recent riots in Paris against increasing France’s retirement age shows just how the West will find it increasingly difficult to grapple with a rapidly ageing population.

This presents an unprecedented opportunity that India is uniquely positioned to capitalise on. Given its large English-speaking and youthful population, 750 million of whom fall under the age of 25, India could become the world’s permanent supplier of unskilled, semi-skilled and high-skilled labour.

Immigration already yields a plethora of macroeconomic and strategic benefits for the world’s most populous economy. India is expected to receive about $100 billion in remittances from its worldwide diaspora of 32 million immigrants. These remittances provide a recurring, resilient and stable source of foreign exchange for India’s central bank at a time when emerging markets face multiple external headwinds.

Remittance effect

Remittances also have multiplier effects on driving internal consumption and investment. There is also vast economic literature to show that immigrants are key in bringing foreign direct investment, establishing supply chains and trade linkages, and diffusing global best practices in their home country. For instance, Indian technology employees in the US have been instrumental in creating and funding start-ups in India, as well as uplifting local communities through non-profits.

For India’s foreign policy, immigrants play a leading role in building soft power and diffusing her rich and vibrant culture throughout the world. In a world where victory is determined by who sets the narrative, and where social media algorithms decide the truth, India can shape the global dialogue through her immigrants.

Moreover, just as trade allowed China to become a powerful player in global issues, large-scale immigration could also enable India to increase her foreign policy heft and engage more deeply with partner countries.

Immigration may also be the silver bullet that India needs to realise her demographic dividend and ensure long-term domestic stability. With the world’s largest population, India faces the unenviable task of providing decent jobs to her labour force of 500 million, with 12 million new entrants seeking employment every year. With large levels of learning poverty, crumbling educational infrastructure, and high rates of informalsation, we face the grim possibility of underemployment for hundreds of millions of Indians.

Supplying labour

High unemployment has also been historically responsible in sparking social unrest throughout the world. Simply put, it is in India’s self-interest to become the world’s supplier and exporter of labour for ageing societies like France, Germany and Japan.

Fears of “brain-drain” are unwarranted and exaggerated. A Sundar Pichai or a Satya Nadella have done far more for India’s economy and her global image by working abroad than they could have by staying home. Arguably, the net present value of the remittances of Indian immigrants is higher than what they could have earned in India (which is why many decide to move abroad in the first place).

Our best talent still attempts the UPSC Civil Services examination, and our brightest engineers are increasingly creating world-class start-ups in Bengaluru. Concurrently, US Student Visas issued to Indians have also hit an all-time high in 2022 as India’s economic growth propels more families to afford a foreign education.

Developed countries recognise that Indians are hard-working, law-abiding and easy to integrate immigrants. By incentivising language training, enhancing skill-development in sectors where industrial economies face labour shortages and by allowing foreign universities to open shop, India is uniquely positioned to capitalise on the developed world’s large appetite for immigration.

By creating appropriate policies and negotiating immigration agreements, India can leverage her large population to establish a permanent engine for economic growth.

The writer is a research analyst at the IMF, Washington DC. Views expressed are personal

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