The story of Indian emigration to America begins with economic suffocation at home. Jawaharlal Nehru, India’s first prime minister (1947–1964), built an economy modeled on Soviet central planning after being influenced by Fabian socialism at Cambridge and a 1927 visit to the Soviet Union. The Industries (Development & Regulation) Act of 1951 became the legislative backbone of what came to be known as the License Raj — a term coined by C. Rajagopalachari (“Rajaji”), a freedom fighter so alarmed by the system he founded the Swatantra Party in 1959 specifically to oppose it. The name was a deliberate echo of “British Raj”: Indians had replaced foreign colonial rule with homegrown bureaucratic tyranny.
Under the License Raj, up to 80 government agencies had to approve before a private company could produce anything. The state decided what could be produced, how much, at what price, and where capital would flow. Firms needed licenses to start, expand, or even change product lines. Former Prime Minister Manmohan Singh himself later acknowledged that “every license, every permit, every amendment to that was procured by corrupt means.” People doing business were considered “immoral and thieves” by much of society, according to former NASSCOM chairman Saurabh Srivastava. The system produced a nation where compliance mattered more than innovation.
The result was what economist Raj Krishna (Delhi School of Economics, circa 1978) termed the “Hindu rate of growth” — India’s GDP averaged approximately 3.5% annually from 1950 to 1980, translating to per capita income growth of just 1.3% after population growth. By contrast, the East Asian Tigers achieved 7–10% growth during the same period. India’s share of global exports declined from 25% in 1947 to just 9% by 1966.
India’s crisis reached its nadir in 1991. The Soviet Union — India’s largest trading partner — collapsed. The Gulf War spiked oil prices. By June 1991, India had only $1.2 billion in foreign exchange reserves — enough for barely two to three weeks of essential imports. The country was weeks from sovereign default. In one of modern history’s most dramatic economic moments, the Reserve Bank of India secretly airlifted 67 tonnes of gold to the Bank of England and Union Bank of Switzerland as collateral for emergency loans. One account describes the van carrying gold to the airport breaking down, causing total panic. The news of the gold pledge sparked public outrage in a country with deep cultural attachment to gold.
The rescue came from P.V. Narasimha Rao (prime minister) and Dr. Manmohan Singh (finance minister), who implemented sweeping liberalization. Singh’s landmark budget speech on July 24, 1991 declared: “Let the whole world hear it loud and clear.” Industrial licensing was abolished for nearly all categories. Tariffs were slashed. Foreign investment was welcomed. India’s GDP growth eventually hit 8–9% during 2003–2011, and roughly 300 million people escaped extreme poverty.
The Pull to America
The Immigration and Nationality Act of 1965 (Hart-Celler Act), signed by President Lyndon B. Johnson on October 3, 1965 at the foot of the Statue of Liberty, abolished the racist national-origins quota system that had essentially banned Asian immigration since the 1920s. Johnson himself said it was “not a revolutionary bill” — he vastly underestimated its impact. By 1990, the Indian population in the U.S. had reached 786,694 (up from roughly 206,000 in 1980). From 1980 to 2013, the Indian immigrant population doubled every decade. Almost 40% of Asian Indians who entered the U.S. after 1965 arrived on student or exchange visitor visas.
AnnaLee Saxenian’s landmark 1999 UC Berkeley study found that by 1998, Chinese and Indian engineers were running one-quarter of Silicon Valley’s high-tech businesses — 2,775 companies with $16.8 billion in sales and 58,282 jobs. By her 2006 update (with Vivek Wadhwa), 52.4% of Silicon Valley startups were immigrant-founded, with Indians alone founding 15.5% — more than the next four immigrant groups combined. Iconic Indian-founded firms include Sun Microsystems (Vinod Khosla, co-founded 1982), Hotmail (Sabeer Bhatia), and contributions to core technologies like the Pentium chip (Vinod Dham) and fiber optics (Narinder Kapany).