Trump’s research cuts 'may mean' advantage China: Will India use global brain drain to its advantage?

By Rajiv Shah 

When I heard from a couple of NRI professionals—currently on work visas and engaged in research projects at American universities—that one of President Donald Trump's major policy thrusts was to cut federal funding to the country's top educational institutions, I was instantly reminded of what Prof. Kaushik Basu had said while delivering a lecture in Ahmedabad.

Apprehensive about what would happen to the projects NRIs were dedicatedly working on—though not as much about whether they would find alternative jobs—they mentioned that there had already been a drastic cut in university research funding. Previously, 60% of the total cost was borne by the federal government, but this had dropped to about 15%. A quick online search revealed that experts were warning that Trump's policy would give China a competitive advantage in scientific research, as Beijing's state support for the sector had sharply increased.

However, I could not find anyone suggesting that India might benefit from the kind of policies Trump was implementing in the education sector. Why? During a 2022 lecture in Ahmedabad, Prof. Basu—former World Bank chief economist and economic advisor to the Manmohan Singh government—provided an answer: The strength of the U.S. economy lies not just in hardware, cars, real estate, and machines, but in its formidable "soft power."

This soft power, especially in the education sector, is where India's future growth rate would also depend, Prof. Basu emphasized. He pointed out that India had a strong international presence in higher learning in the past, "which needs to be revived."

In an earlier lecture at the Indian Institute of Management Ahmedabad (IIM-A), Prof. Basu quoted Nobel Prize-winning economist Angus Deaton, who had praised India's pioneering work in statistical research. Deaton noted that India's National Sample Surveys, pioneered by P.C. Mahalanobis in the 1940s and 1950s, were the world's first household surveys to apply the principles of random sampling. Prof. Basu stressed the need to protect this legacy, stating, "We must take care not to damage this reputation... India’s fundamentals are strong, and we should be doing much better."

He further pointed out that India was already suffering from a shortage of professionalism and an excessive focus on big businesses and their interests. "Professionalism means policymaking based on data and reasoning. The economy is too complex to be handled by hunches and gut feelings. Passion is important, but you cannot have exports booming and jobs being created by passion alone. Expertise and professionalism are critical," he said.

While what Prof. Basu said seemed particularly relevant to social sciences, I wondered: isn't it equally applicable to scientific research? While India established some of the best technology institutes in the 1950s, the failure to foster a cohesive research ecosystem within the country has led to massive brain drain. Many of India's brightest minds now work in Silicon Valley, contributing to the very "soft power" that Prof. Basu described—only for the U.S.

With India already following a policy similar to Trump’s—favoring big business-supported research projects over state-backed ones—will it take corrective steps to reverse the massive brain drain that has taken shape over the years? If one considers expert American views on state support versus corporate-funded research, the former has historically been the backbone of U.S. innovation.

Prof Kaushik Basu

Let me quote an expert based in the U.S. who shared insights with me on this issue:

The U.S. National Institutes of Health (NIH) is the world's largest public funder of health-related research, my source noted. Medical research success "relies on sustained NIH funding that allows for long-term, high-risk, high-reward projects." The source warned that universities unable to cover overhead costs would have to limit research programs, reduce lab sizes, and cut collaborations—at a time when "China's Made in China 2025 initiative prioritizes biotech, AI-driven drug discovery, and precision medicine, ensuring stable funding for their researchers."

The message continued: "Reduced NIH support would increase dependence on industry funding, which prioritizes short-term, profit-driven research over basic science." To illustrate this, the source cited economic spillover data: "Industry R&D generates a lower economic return ($0.40–$1.40 per $1) compared to NIH-funded research ($2.46 per $1). China's government-supported model, on the other hand, funds both basic and translational research, enabling long-term innovation."

The warning was clear: "If the U.S. reduces NIH indirect rates from 60% to 15%, universities will struggle to sustain biomedical research, leading to fewer discoveries, talent migration, and weakened global leadership. China, with its increasing investments in biotech, AI-driven research, and translational medicine, would likely benefit from the gap and surpass the U.S. in medical research leadership within a decade."

The message further emphasized that "indirect costs fund critical research infrastructure—lab maintenance, IT support, compliance with federal regulations, and administrative staff handling grants." If the funding rate were slashed to 15%, universities would be unable to cover these costs, forcing institutions to either subsidize federal research (which is unsustainable in the long term) or cut research programs altogether.

Reiterating that "China has been increasing research infrastructure funding, and a U.S. funding gap would give China a relative advantage," the expert warned that this could lead to a talent drain and reduced workforce development, ultimately affecting "graduate student training, postdoc salaries, and faculty recruitment."

Further cautioning that "a major cut in indirect costs would force universities to reduce hiring and training, leading to a brain drain as top researchers move to China, Europe, or industry where better funding is available," the message highlighted that "China's Thousand Talents Program and direct government support already offer competitive salaries and lab funding to attract global researchers."

While some of the most competent minds in social science, pure science, and technological innovation are of Indian origin, will India ever develop a strategy to bring them back? Let's wait and see if India can take advantage of Trump's arguably misguided policies on research.