Time For India To Open Its Own IT Innovation Hubs

India has long lamented its ‘Brain Drain’ from the Indian Institutes of Technology (IITs), in particular. The Indian taxpayer has subsidised top class technical higher education, right  from the days we could ill afford it, only to see the entire highly talented class of graduates make a bee-line for the US.  This is true of our doctors and nurses prominent all over the world in addition to the US and Europe as well.

There, at the fabled El Dorado, our IT people have had  challenging opportunities, excellent pay and perquisites, and a high standard of living. This has gone on for decades. In India the IT companies like Infosys and TCS among a host of others have also blossomed alongside and contributed handsomely to India’s software exports.

Now all this may have to change, at least for new aspirants for the H1B visa, because the Trump administration has put a $100,000 fee on it  The existing visa holders,( nearly 80 percent of all H1B visas are held by Indians), can continue and renew them without additional charges, beyond the nominal rates applied at present.

This $100,000, if it remains unchanged, puts a virtual ban on new applicants. It is an amount neither the individual nor his sponsoring company, either in India or the US, can afford. However, if the intent is to force the hiring of American citizens instead, the IT companies may have a difficult time of it, because there are not many with the requisite skill sets.

Some American and European companies have already opened and operate design hubs, data mining, back-office and other types of centres in India. But before this new hundred-fold increase in visa charges, most American companies ran their Centres of Innovation in America, but largely using top grade Indian talent.

Because of this dominant global structure imposed by the biggest buyers of the resultant software, Indians ended up doing much of the basic IT work via what has been derisively called technical coolie work. Indian companies have thus far avoided competing with Innovation Centres of their own. These could have come up quite easily in India, and will, no doubt do so now. They can also sprout in nearby offshore locations, with liberal tax laws and excellent infrastructure, such as the United Arab Emirates (UAE).

India  now has a Free Trade Agreement (FTA) with the UAE since 2022, which can greatly assist swift cooperation and collaboration for such Innovation Centres.

Artificial Intelligence development that is changing the entire IT landscape, as the next step up from semiconductors/chip manufacturing and use, with its revolutionary abilities and cost saving applications need vast amounts of electricity.  So does the semiconductors and chip development industry getting started in a big way in India, in addition to large amounts of water, and of course, rare earth mineral products such as ‘magnets’. But AI, while essentially using semiconductors/chips can constantly improve their capability and quality.

Rare Earth mineral development and its products are also being fast-tracked in India from mining onwards. But right now it relies on imports from current monopolist China. Neither the semiconductor/chips nor AI can function without rare earth products.

India is now more than willing to take the comprehensive plunge and just as it has obtained collaborators from Taiwan and South Korea for chips and semiconductor manufacture, supported by huge government incentives under generous PLI schemes, there is no reason why the same cant be done for the development of Technical Innovation in IT.

India can also offer long-term visas to Europeans, Americans, Taiwanese, Japanese, Koreans and technical Chinese to set up  on their own. We couls also collaborate with the Chinese in China and learn rare earth technology, chip magnet manufacturing and probably cyber protection. They want Indian technical talent and are offering visas. India’s major advantage is this large pool of technical personnel that could be employed in the Indian Innovation Centres and elsewhere. Germany and China may have been quick off the mark, but there will be many others such as Canada and Britain wanting to employ Indians for their technical expertise and ease with the English language.

With ongoing economic reforms, a robust economy, and the growth of India as a manufacturing and investment destination, the possibilities are indeed great.

Internally, lowering of GST rates, income tax rates, hike in government pensions and salaries, are collectively setting off a consumer boom to counter the US tariff wars. We can see a flash growth already in automobile sales right at the beginning of the festive season. Rate cuts in  repo interest by thew RBI based on low inflation and a reduced trade deficit is stimulating private sector investment. This includes the MSME sector that employs large numbers. There is greater consumer spending as intended. News reports indicate there is a likelihood of allowing greater foreign investment in Indian banks in the near future.

In short, things are accelerating in the Indian economy. Present threats to labour intensive employment because of high US tariffs will probably resolve soon.

 FTAs with the EU and indeed the US may both be in place by the end of this calendar year 2025.  From 50% tariffs imposed by the US we may be down to about 10 to 15% with an interim trade agreement in hand as well.

The Innovation Centres that India may soon set up will contribute to the immense demands of the domestic market let alone export. That will interest foreign investors because few such opportunities exist now.  AI could contribute substantially to spends even as it improves efficiency and profits. India’s stress  on aatmanirbhar Make in India is the leit motif.

This is being seized upon by a large number of foreign companies who regard it as their way into the vast Indian market. In addition, there is the consumption of the huge domestic defence industry. Companies off the starting block with MROs, collaborations, technology transfers include Dassault and Airbus from Europe, Embraer from Brazil, GE  from the US , Rolls Royce from the UK, Russian defence companies. An FTA with the UK and another with four countries in Europe including Switzerland already exist.  There is a lot of collaboration in missile and drone technology with Israel in addition to substantial imports as well.

Submarine technology is coming into the collaborations with France and Germany. Other aircraft companies such as Boeing, Airbus, Rafale (Dassault), and Lockheed Martin are  also sourcing parts and components from India and its private sector independently.

AI can greatly help the semiconductors and chip industry, the electronic space, the automotive industry including electrical cars, alternative energy,  fuel refining and distribution, lubricants, nuclear energy. , infrastructure, including roads, tunnels, airports, dredging, dams, canals, railways and civil aviation, UAVs, drones, chemicals, fertilizers, ISRO and space, machines used in manufacture themselves. Then there is food production, afforestation, conservation, animal welfare,  indeed value addition of various sorts to almost every endeavour. The sky is the limit in India and IT innovation Centres can contribute massively to it all. If we get it right, we can do it all for ourselves and export our cutting edge know-how too.

Commercial  Ship-building is attracting big investments from South Korea, Japan and others. Modern ports are developing at a fast pace including container handling deep water ports. Off shore drilling for large oil reserves off the Andaman Islands offer great prospects. The electronics sector is not only attracting major American companies like Intel and Apple but also Samsung of Korea. And  all are committed to Make in India.

The question is not really about the potential. It is about how quickly India can move to seize the day.

(1,271 words)

September 24^th, 2025

For: Firstpost/News18.com

Gautam Mukherjee