How Americans benefit by
bonding with India
BS REPORTER
New Delhi, 28 June
he popular perception
T is that companies in
India are taking jobs
away from Americans but the
numbers on the ground tell a
different story.
In the last five years
alone, 90 Indian companies
have created 16,576 jobs in
the US by investing $5.5
billion in new companies
and saved over 40,000 jobs
by making 372 acquisitions
and investing $21 billion
(for 272 deals).
These were some of the
interesting findings of a
recent study on How America
Benefits from Economic
Engagement with India by
the India-US World Affairs
Institute of Washington, the
Robert H Smith School of
Business, University of
Maryland and the Federation
of Indian Chambers of
Commerce & Industry.
Authored by Professor
Vinod Jain of the University
of Maryland and Kamlesh
Jain, director of research &
education at the India-US
World Affairs Institute, the
study covers India’s foreign
direct investments into the
US and US exports to India,
as well as an assessment of
their impacts on the
American economy.
Indian companies have
been investing abroad,
including in the US; with the
rise of India Inc., the
magnitude and impact of
such investments have
increased. Some Indian
companies to which work
was being outsourced earlier
are now ‘insourcing’ such
jobs within the US itself,
using American workers to
perform value-added work.
People wait in line at a job fair in Washington. In the last five
years alone, 90 Indian companies have created 16,576 jobs in
the US by investing $5.5 billion. PHOTO: BLOOMBERG
More than two-thirds of the
$5.5 billion of the greenfield
investments in the US were
made by 10 companies: Essar
Steel, JSW Steel, TCS,
Welspun Group, Reliance
Adlabs, Indage Group, HCL,
Flag Telecom, RIL, and Tata
Communications. Over 40,000
jobs were created or saved by
85 acquisitions (data for which
was available); the number of
jobs saved for 372 transactions
would be much higher.
Between 2004 and 2009,
US exports to India grew 269
per cent, while India’s
exports to that country grew
136 per cent. US exports to
India have grown faster than
exports to all other countries.
In 2009, India was United
States’ 17th largest goods
export market, and 15th
largest supplier of goods
imported into the US.
Interestingly, in the 1700s,
America traded more with
India than with all of Europe
combined.
The US exports high-tech
products such as aircraft,
electrical machinery, optic
and surgical instruments,
chemicals, plastics,
pharmaceuticals, vehicles,
and railway stock and traffic
signal equipment. With the
US-India civilian nuclear
agreement, US exports to
India are likely to grow even
faster in the coming years,
creating more jobs in the US.
Just manufactured exports
to India were linked to 96,000
manufacturing and non-
manufacturing jobs in the US
in 2009, the study estimates.
These numbers do not include
agricultural, mining, and
services exports, which have
their own implications for
jobs in the US. For instance,
in 2007, the US exported
services worth $9.4 billion to
India, compared to the goods
worth $15 billion that are the
focus of this study.
The 2.57 million Indian-
Americans also contribute to
the US economy and society
in many ways. According to a
recent survey by the US
Census Bureau, there were
231,000 businesses owned by
Indian Americans in 2002,
which employed 615,000
workers and generated over
$89 billion in revenues.
Indian immigrant
entrepreneurs have founded
more engineering and
technology companies during
1995-2005 than immigrants
from Britain, China, Japan,
and Taiwan combined.
Currently, there are almost
10,000 Indian-American
owners of hotels/motels in the
US, who own 40 per cent of
all hotels in the US and 39
per cent of all guest rooms,
and employ over 578,600
workers. There are about
50,000 physicians (and 15,000
medical students) of Indian
heritage in the US.
Education is one of
America’s finest exports. The
foreign students who come
for higher studies to the US
not only bring talent, but also
contribute to the US economy
via tuition and living and
other expenses. India has had
the largest number of foreign
students in the US among all
countries of origin for eight
years in a row. In 2008, there
were 94,563 students from
India, who contributed $2.39
billion to the US economy.
The other benefits of
engaging with India include
noble laureates like Har
Gobind Khurana (Medicine,
1968), Amartya Sen
(Economics, 1998), CEOs in
several corporations like
Indra Nooyi (PepsiCo),
Vikram Pandit (Citigroup),
educators like Pradeep
Khosla (dean of engineering,
Carnegie Mellon University),
Nitin Nohria (dean, Harvard
Business School), and
journalists like Fareed
Zakaria (editor, Newsweek),
to name a few.