Brain drain again

It’s a miscalculation of gigantic proportions. Tata’s was no bluff. Because he knows something that Banerjee has not understood: it’s not only because other Indian states want the investment and prestige of having the Nano to roll off their roads; it’s because other countries want to make world history and would give anything to have India’s star innovation manufactured on their soil.

Banerjee’s actions will only precipitate a worrying trend — a second brain drain from India. Only this time it’s not brilliant individuals leaving the country in droves for greener pastures, but brilliant corporations.

Thirty years ago, bright young Indians —engineers, doctors, academics — fled India because they were too qualified for the domestic environment. Thirty years later, the same pattern is being repeated, this time with companies. Having reinvented themselves after decades of protection, they’re hitting a wall at home. They’ve become world class, sometimes even best-in-class with innovative products, global accounting systems and internationally feted managers. But like their individual counterparts, they’re now over-qualified, restricted and just plain unappreciated.

Why worry? Isn’t this is India’s golden global moment, to be celebrated? Yes. But view it from the underside: the second great exodus.

To keep India growing and industry productive, several reforms are needed. Infrastructure for better distribution, access to natural resources to fire manufacturing, land reform for an agri and industrial revolution and massive education and vocational institutes to train talent. These are not forthcoming. So private Indian capital, which had been investing at home these past five years, is now moving to foreign environments that will let them prosper. They’re getting better credit, impartial and institutionalised regulation, superior infrastructure, greater opportunity, innovation incentives. “One of the major drivers of going international is to get out of the clutches of a single economy running your business,” said Ratan Tata in 2005. He could not have been more prescient.

... contd.