'We have oppressive business regime': India’s problem isn’t brain drain, it’s policy pain, says Mohandas Pai

India’s real crisis isn’t the so-called “brain drain” — it’s the stifling business environment, lack of capital, and bureaucratic apathy driving its brightest minds abroad, says Mohandas Pai, chairman of Aarin Capital and former CFO of Infosys. In a sharp critique on the Bharatvaarta podcast, Pai dismantled the notion that India is losing out simply because its youth are leaving — arguing instead that systemic failures are pushing them out.

“Why do people leave India and go overseas? They get better prospects,” Pai said bluntly. “Can India offer them the same prospects? No. It’s tougher in India. It takes more time. We have a very oppressive business regime… we don’t have enough capital… and we have tax terrorism.”

Pai’s remarks land hard as India witnesses a surge in outward migration. Between 1.3 to 1.6 million Indian students now leave the country each year. According to Pai, aside from the top tier attending elite universities, many come from smaller towns, often selling family property and even paying “human traffickers” to facilitate their exit. The goal is clear: immigration, not education.

“They’re not going to come back,” Pai said. “And those who are successful will not come back. They’ve got houses, jobs. It’s illogical to say they’ll return to build India. There is no nationalism among people who’ve gone out for economic reasons.”

Yet Pai sees no tragedy in this. “There is no brain drain. It's all rubbish. Let them go. We're a free country. Let any Indian who wants to go outside, go. We’re not going to lose anything. We’ve got enough brains in this country.”

What India lacks, he argued, is not talent — but capital and policy will. Citing numbers from 2014 to 2024, Pai pointed out that while India invested $160 billion into startups and venture capital, China invested $845 billion, and the U.S. over $2.3 trillion.

“This money is not coming [to India] because of stupid policy,” he said. Insurance companies, pension funds, and endowments in India are blocked from investing in innovation, unlike their Western counterparts who drive global R&D. “LIC has ₹80 lakh crore in AUM — how much of that has gone to startups? Nothing.”

Pai also blamed passive governance. “We go to the finance ministry. They listen and laugh at us,” he said, urging regulators to unlock domestic institutional capital. “Canadian pension funds took the India risk, currency risk, and are laughing all the way to the bank. Why can’t our own funds do the same?”