Rising remittances cannot mask the cost of brain drain, as more Indian students spend abroad than they send back. With visa curbs, high living costs, and underpaid jobs overseas, India faces both challenges and opportunities to retain its talent
Limited seats in prestigious universities in their home country has for decades been pushing Indian students to pursue higher education abroad, resulting in what is called an intellectual brain drain. Rather than staying back and contributing to their home country, a plethora of privileged students are choosing to go abroad for college. There has been, in recent years, a large section of academics who argue that this is in fact a good thing. ‘Remittances are rising rapidly’, they say.
They’re partly right but they’re missing the bigger picture. While India is the largest remittance-receiving country in the world and it is in fact true that remittances have more than doubled from 55 billion dollars in 2010-11 to 118.7 billion dollars in 2023-24, the statistics only convey the story partly. Firstly, remittances as a percentage of GDP has remained constant at around 3 per cent since 2000. Secondly, what Indian students are now spending abroad for education has risen rapidly. According to some estimates, the total spending by Indian outbound students could reach 70 billion dollars by 2025 — a number which is rising more rapidly than the remittances being sent back.
Thirdly, and most importantly, this argument fails to consider an important hypothetical: what if these students had chosen to stay back? The argument I make is two-pronged. One, that if the students were to stay back, the Indian economy would benefit far more — in other words, remittances do not compensate for the economic and intellectual capital drain caused, and two, at times it would also be far better for the students to stay back in India, taking into account the cost of living abroad and recent anti-immigrant trends across the world.
Let me address the second claim first. According to the latest data from the Ministry of External Affairs (MEA), over 1.8 million Indian students are currently studying abroad in 2025 — a staggering rise from 1.3 million just two years ago. This data, however, hides one important detail.
All the top three destination countries — Canada, US and UK — for Indian students (which account for a third of all Indian students heading abroad for education) have witnessed a sharp decline in the backdrop of tightening immigration measures, including introduction of caps on student intake and restrictions on dependent visas.
Consider this: from 2023 to 2024, Canada witnessed a 32 per cent drop, with permits falling from 2.78 lakh to 1.89 lakh, the United States saw a 34 per cent decrease, with F1 visas dropping from 1.31 lakh to 86,110, and the UK recorded a 26 per cent reduction, with sponsored student visas issued to Indians decreasing from 1.20 lakh to 88,732 during the same period.
While some argue that this is a bad sign, it provides a window of opportunity for the Indian government to reverse decades of brain drain.
But will the anti-immigrant rhetoric and curbs on visas actually prevent students from going abroad, or will they just change their destination of travel? I think that it most definitely can.
Many Indians who go abroad are actually not receiving good returns on the thousands of dollars they spent on their college education. First, many are unemployed or underemployed after their education is completed.
Second, those who get jobs are getting paid less than what Americans and Europeans with the same skills are earning. As an example, the H-1B Visa Reform Act of 2004 restructured the salary slabs and inserted two wage levels, at the 34th and 50th percentiles of the total salaries surveyed for an occupation in an area, below the highest (the 67th percentile). This implies an underpayment for Indian (and other international) workers embedded in the law itself.
Third, their attractive salary packages include e-SOPs and other variables which are not actually part of what they receive in hand, and the cost of living abroad is considerably higher than the cost of living in India. Rent, groceries and travel all make up a considerable chunk of their expenditure, and what they’re left with is sent back to their families.
While Indian students who get into Ivy League institutions would perhaps not want to stay back in India, to make many others stay back will be a low-hanging fruit. With minimal efforts, India will be able to retain talent which will not only show up in GDP figures for years to come but will also advance R&D in the process.
A particularly promising area of collaboration is the growing partnership between India and the UAE in the fields of education and employment. The UAE has become a top destination for Indian professionals, with the country expanding opportunities for skilled workers in various sectors, including healthcare, engineering and IT.
Education-wise, both nations have been actively exploring collaborative programmes, exchange initiatives, and scholarships to enhance bilateral ties. Indian universities and institutions are establishing campuses in the UAE, further cementing the relationship. For Indian students, this provides an attractive, nearby option for world-class education, while also offering enhanced job prospects in the UAE’s rapidly growing economy.
There can be two ways of retaining talent in India. First, to build more good-quality higher education institutes and second, to ensure that Indians return to their home country after graduating abroad. In terms of the second objective, India is already in the process of reversing the brain drain. Under the leadership of PM Modi, the most cutting-edge, deep tech and frontier tech start-ups, led by Indian students with PhDs from major global universities, are now taking root in India. Our start-ups have grown from just 400 a decade ago, to 1.3 lakhs today, and nearly 50 per cent of these are coming up in Tier 2 and Tier 3 cities.
It is here that the role of political leadership deserves special recognition. Prime Minister Narendra Modi’s vision, combined with the efforts of senior leaders like Devendra Fadnavis and Dharmendra Pradhan, has ensured that education and employment remain at the core of India’s growth story. Maharashtra CM Fadnavis has been instrumental in advancing educational reforms at the state level, pushing for skill development and industry-academia linkages, while Pradhan, as Education Minister, has driven initiatives that strengthen higher education and empower students with future-ready skills. A recent example is steps taken to make Mumbai a global education hub by handing over Letters of Intent to five globally acclaimed universities to set up campuses in Maharashtra. Together with the Prime Minister’s emphasis on innovation and entrepreneurship, their combined leadership has laid the groundwork for India to transform its brain drain into a brain gain.
India stands at the cusp of a technological revolution, presenting immense opportunities in areas such as artificial intelligence (AI), machine learning (ML), big data, energy transition, electric vehicles (EVs), quantum computing, genomics, 3D printing, robotics, drones and space exploration. All these sectors have been kickstarted by the Government through initiatives like the National Quantum Mission, India AI Mission, and the Semiconductor Mission.
Some problems remain, however. The biggest one being domestic funding, which needs to grow rapidly. Consider this — Indian start-ups raised over $12 billion in 2024, but about 75 per cent of this came from international sources. Another one is payment of royalties. While India produces approximately 24,000 PhD graduates annually, the country paid $14.3 billion in IPR royalties in 2024, while earning only $1.5 billion, highlighting a significant gap which can be filled by greater innovation.
The first challenge seems to be more daunting — building quality higher education institutions. While premier education institutions like the IITs, IIMs and IIITs are producing skilled professionals and are second only to Ivy League colleges, there is a dearth of such universities in India. Another challenge is a change in curricula, which is already underway to link research and industry needs. This would involve addressing skill shortages in data science, biotech, clean energy, AI and ML among others. For this, industries must step up and support the government.
It is a known fact that in India research is more de-linked from industry needs in comparison to other countries. In short, it is not solely the amount of R&D that matters, but the quality. To date, two-thirds of the R&D in India is contributed by the Government. The private sector needs to step up to fill the gap.
India is well positioned to become the world’s leading start-up ecosystem.
With graduate upskilling programmes, the Government’s initiatives to foster innovation, and the support of universities and corporates, the aspiration of Aatma Nirbhar Bharat, where talent nurtured at home stays and contributes locally, will come to fruition in the coming decades.
The writer is Chairman & MD, SatyaGiri Group, India & UAE