A senior director at the Bay Area Council Economic Institute explains how developments in the Silicon Valley and Bay Area could be the bridge that the US and India could build on for mutual future growth.
- Diaspora ties and India's prowess in software and IT services have been the bedrock of the India-Silicon Valley/Bay Area connect.
- Regulatory reforms reducing administrative complexity and streamlining the approval of foreign investment are making it easier for overseas companies to enter India's tech sector.
- Clean Tech offers a great opportunity for collaboration between India and California.
The San Francisco/Silicon Valley Bay Area and India have long been connected by a deep
and by India's prowess in software and IT services. Now that base is growing, as India's needs and priorities align more broadly with the capabilities and innovation assets that
is widely known for.
More than 300,000 Indian immigrants live in the Bay Area - an extraordinarily successful community by any standard. Their median income is $107,000, 77 per cent hold advanced degrees, and nearly three-quarters are employed in management, business, science or the arts. Indians also make up the largest cohort of foreign students in engineering and computer science at Bay Area universities. Reflecting this, the region also hosts the largest number of IIT graduates outside of India. Over time, many have become entrepreneurs and investors in the next generation of innovative companies. This depth of engagement, cultural knowledge, technical experience and investment capacity provides a unique bridge across which talent and innovation flow.
Across that bridge, most major Bay Area technology companies have Indian R&D centres, producing technologies and services that support innovation in India as well as services for US and global markets. The depth of this engagement has helped put India on the map of countries that have successfully developed global innovation hubs. Indian IT companies in India, such as
a, are returning the favour with a growing US presence built on workforce development customer innovation.
The recent changes in India's economic landscape under Prime Minister
promise to accelerate this interaction. Most significantly, the government's first term in office saw reforms that are pushing India toward an economy where transactions are increasingly digital, government services are digitally accessible, telemedicine reaches deeply into rural areas, and 5G connectivity links urban and rural areas. In turn, this is generating new opportunities in fields such as digital healthcare, fintech and digital payments. The process is enabled by a massive increase in the use of smart and mobile phones, with very low-cost data. It is estimated that by 2023 India will have a connected market of up to 700 million smartphones and 800 million internet users, driving an explosion of e-commerce.
Regulatory reforms to reduce administrative complexity and streamline the approval of foreign investment are making it easier for overseas companies to participate in these rapidly growing markets. PM Modi's recent election to a second term suggests that these reforms will continue.
The digital and other initiatives being implemented across India have the potential to draw Bay Area companies in further. As the global centre for digital innovation, the Bay Area offers an extraordinary depth of technological capacity and expertise to accelerate these processes. Bay Area companies such as Salesforce, Google, Cisco and Oracle are already deeply engaged. Life science and health care - areas of Bay Area strength - offer other opportunities. And as the world's start-up capital, the region offers an important platform to support India's growing ranks of energised entrepreneurs - not least through venture investment, where firms such as Sequoia Capital, Westbridge Capital and Point Guard Ventures are active.
Another connection comes through
. India's government, faced with rising temperatures and melting Himalayan glaciers, has pledged to reduce greenhouse gasses by 30-35 per cent from 2005 levels by 2030, and to generate 40 per cent of its electric power from renewable sources over the same period. This connects deeply with the Bay Area and California, which lead the nation in their adoption of strategies to promote
and promote renewable energy. Supported by public policy, Bay Area companies and laboratories are generating state-of-the-art energy and environmental technologies, making the region home to the United States' largest cluster of innovative cleantech companies.
India's relationship with the US, while vastly improved, has its challenges - some of which concern Silicon Valley. In particular, policies that would require all data generated in India to be exclusively stored inside the country raise serious issues for Bay Area internet and financial services companies that routinely move data across borders. Onerous policies regarding data privacy are a related concern that could negatively impact US engagement and India's future as a global IT and innovation hub. Trade is another flashpoint. These issues can be resolved, but a focus by both sides on the importance of the larger relationship will be needed.
There is a strong reservoir of goodwill to build on and growing economic stakes. The San Francisco/Silicon Valley Bay Area is a unique bridge that can support India's goals and generate jobs and growth on both sides. State and local governments should work to strengthen and expand that bridge. And for global companies that have avoided or overlooked India until now, India merits a fresh look.
Sean Randolph is Senior Director at the Bay Area Council Economic Institute, and author of its recent report 'The Bay Area-Silicon Valley and India: Convergence and Alignment in the Innovation Age'.