Advanced economies, and the United States in particular, have thrived through visa regimes that are geared towards drawing the best and the brightest to their shores. While the best entrepreneurs have been lured through the promise of permanent residency and eventual citizenship in return for investing in these countries, the brightest have been drawn to academia and research centres by the quality of educational and research facilities that are unmatched elsewhere. The global recession has seen many of these advantages lose their sheen, and an increasing phenomenon of “reverse migration” as thousands of professionals return to their home countries. The emphasis in the United States has thus shifted from attracting new talent to retaining the foreign talent that is already at hand. On March 14, 2011, Senators Kerry and Lugar re-introduced a Startup Visa Bill in the Senate that represents the most aggressive attempt yet to both attract and retain the best of entrepreneurship and talent on American shores.
Facilitating visas for entrepreneurs is a device employed by many countries for the purposes of employment generation and economic activity. The US itself has had an EB-5 category of visa created through the Immigration Act of 1990 which made any entrepreneur who invested between $500,000 and $ 1 million and created 10 new jobs eligible for a Green Card. The emphasis of the new legislation, titled the Startup Visa Act of 2011, is not so much on attracting investment, as on drawing entrepreneurial talent and retaining advanced skill sets. Thus, an aspiring entrepreneur, with an innovative idea and a working business plan, needs to raise as little as $100,000 from an American investor to qualify for the visa. If he can get a further $500,000 of capital invested in his endeavour over the next two years, while creating five new jobs, he would be eligible for permanent residency at the end of the two year period. In the same week as this legislation was introduced in the US Senate, the UK government put the final touches on its version of a Startup Visa Act, which also lowered investment barriers and laid emphasis on attracting the technological talent that is powering the knowledge centric global economy. The UK’s efforts only underscored the words of Senator John Kerry, a co-sponsor of the Bill, that “Global competition for talent and investment grows more intense daily (italics mine) and the United States must step up or be left behind…”
What is even more striking about the proposed legislation is that it lowers the bar even further for students and holders of the much vilified H1B visa. Wannabe entrepreneurs from these two categories only need to raise $20,000 in initial investment, a fraction of the $100,000 required of others, and must raise investment of $100,000 and create three new jobs as against the normal requirement of $500,000 in investment and 5 new jobs. According to the US Government Accountability office (GAO), Indians make up 46 per cent of all H1B visa holders in the United States which ranges between 650,000 to 1 million. This is an opportunity for many of them to make the transition to entrepreneurship. The general euphoria notwithstanding, it must be mentioned that the number of Startup Visas available are limited since they will come within the overall quota of 10,000 EB-5 category visas, and will also have to be shared with graduate school graduates.
Till recently, Indian students were also the largest single country cohort, closing in on 100,000 till they were replaced by Chinese students. Recent trends show that the international student population has become somewhat of a hot commodity for a number of reasons. In the first instance, they are a major source of income; the income generated by the United States from the 690,000 international students on US campuses in 2009-10 was in excess of $19 billion. Secondly, in an era when knowledge has become the most precious of commodities, transfer of knowledge takes place through brain circulation in academia. Thirdly, these exchanges are seen as a way of promoting the interests and influence of both the sending and receiving countries. According to a report brought out by the Senate Committee on Foreign Relations, the “staggering 30% increase over the year before ” in students from China, many of them in the United States at the instance of the Chinese government, has to be seen in this light. The same report notes that as opposed to 130,000 Chinese students in the United States, there are only 13,000 American students in China. According to another report, China, on its part, is aiming to host 500,000 international students by 2020, up from the current level of 260,000.
How does India compare in the global competition for talent and investment? The World Bank’s Index on the Ease of Doing Business, which ranks countries on various business related parameters, places India at 134 out of 185. A discussion on an Indian online forum following the startup ecosystem in India speculates that this Visa could impact India in many ways; there would be a halt in the number of skilled entrepreneurs returning to India (which was picking up steam), and many Indian startups might even shift base to Silicon Valley especially if they were creating products for global customers.
On the education front, a report by the Association of Indian Universities brought out in 2009 puts the total number of international students in India at 21,000. Though there have been many initiatives on the education front to kick start the moribund tertiary education sector and make it world class, from the establishment of 14 “innovation” universities to proposals for foreign universities to establish campuses in India and vice versa, the majority of them have been still born, while the other proposals are moving at a glacial pace. If this state of affairs continues, then India will continue to be what it is today, a reservoir of talent for other countries to power their growth, than the global innovation powerhouse that it aspires to be.