Shruti Rajagopalan is an Economist at George Mason University in Fairfax, Virginia. Two weeks ago she published a blog which the whole world seems to have read. In case you haven’t, our recommendation is that you read it not least because the blog presents India’s key numbers relating to its economy, its demographics, its tech landscape and its investing landscape in an easy to understand manner. Unlike the sort of pieces that economists or strategists working in brokerages write, Shruti’s blog is NOT making a bull case for investing in India. Her point regarding India’s ascendancy is broader and basis our reading, she’s urging the world at large to look at India from four vantage points.
The first point is that Indian talent will become incredibly important and influential not just in India but also in the West. Basically, think Satya Nadella, Sundar Pichai and Rishi Sunak and multiply that impact thousand-fold: “The single largest pool of talent will be STEM graduates. American and British labor markets face a massive shortage of STEM graduates, usually filled by foreign-born/trained students because domestic students don’t want to major in STEM subjects. And even though India’s education system is broken, and basic literacy and numeracy levels are sliding post-covid; in absolute numbers, India will produce the largest number of English-speaking STEM graduates. STEM education is considered by most Indian families as the ticket to a good job and upward mobility, a cultural norm that is unlikely to change in the foreseeable future….”
Her second point is that companies and countries which cannot – for whatever reasons (mental mindset, cultural issues) – lock into Indian talent will find themselves sliding into the mire: “The current wait time to receive a Green Card for a work permit-based (EB2/EB3) Indian employees of U.S. businesses who entered the line in 2018 is 50 years!
The US has a particularly bad immigration system where Indians are concerned. First, the US issues too few work visas relative to the demand generated by US firms, especially for highly skilled STEM talent from large countries like India and China. Worse still, the US limits the total number of green cards i.e., legal permanent residency per year, and caps the number of green cards that any single nationality may receive at 7 percent of the annual quota (approximately 25,000). Irrespective of the size of the country or immigrant group (from a given country) seeking employment-based green cards, the total number that can be issued in any given year is fixed. And once a country hits the limit for that year, those in line from other countries will move up. The wait time for countries with large populations and large immigrant inflows to the US (like China, India, Mexico, Philippines) can be years, sometimes decades.
During the tech boom in the nineties, Indians easily moved to Silicon Valley and rose to the top. Top STEM talent today is reluctant to move to the US and deal with immigration problems for decades. The UK, Canada, or founding their own start-up in India, are far more appealing. Given changing global demographics, the country caps obstructing Indian talent is hara-kiri for the US labor market and innovation.”
Her third point is that regardless of which country a company is based in, it will have to come up with a product suite targeted at Indians (regardless of where the Indians might be living): “For content creators and distributors, Indians are already the largest audience for free content and network goods/platforms like Meta and YouTube. India will be the largest market for English-speaking content in the future.
English is the 44th most spoken language in India (at native-level fluency). Only about 1.5 million Indians speak English as their first language. But about 15-20 million have relatively high levels of English fluency as a second language, and another 200 million can understand basic English….The surface-level India coverage in these papers, and the lack of the context of longer-term historical, political, and cultural issues, will ensure they remain “foreign” and never gain a large audience in India.
While newspapers are the last to figure it out, sports leagues are one of the first! Highly-anticipated soccer league matches, where Indians don’t even have players or a team, have a higher viewership than the most watched American events. Cricket World Cup matches (like the India v Pakistan match in 2019) are viewed by three times the number watching the Super Bowl. Cricket and soccer are assured a massive audience in the future and will survive; perhaps MLB and NFL executives should learn from the NBA, and visit India soon to recruit players and cultivate an audience.
Some content creators already recognize the potential for a large Indian audience; Netflix and Amazon create shows like the award-winning Sacred Games and Paatal Lok and the American-style reality cringe-binge Fabulous Lives of Bollywood Wives. These shows are made in India for Indians, but using an American miniseries/reality series format, and have traveled well, thanks to subtitles. Other shows, like Indian Matchmaking (another cringe-binge, but with a face-reading astrologist!) are meme-launchers in India and are dinner conversation at every Indian-American do.”
Her final point is that disruptive innovation will increasingly arise from India and here venture capital investors (rather than private equity or stockmarket investors) have already taken the lead: “Design and hardware solutions are always contextual to the user environment, and India provides an interesting laboratory to experiment with low-cost hardware solutions at scale. The best example of this is India’s Mars Orbiter Mission, the only country to complete such a mission on the first attempt, and on at a cost lower than the budget for many Hollywood movies. Hardware design and development at scale is ripe for innovation outside of space research and engineering.
…We’ve supported incredible young entrepreneurs working on: the development of ultra-low-cost, filter-less outdoor air purification systems; up-cycling plastic into building material; decarbonizing plastic by developing hemp fiber-based bio-composites; low-cost high-performance green composite propellant to power space launch vehicles; converting captured carbon emissions into building tiles; building, deploying and maintaining smart toilets at scale; high-efficiency, low-cost, nanosatellite; and developing a VTOL drone design that can takeoff/land in dense urban areas. I can go on.”
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