Industry
Passport power: Why having visa friends is vital for business
Summary
It’s a summer travel season when Indians will likely haggle over visa woes. How some other countries like the UAE boosted their passports could hold the key to make it easier for Indians as well.
A passport is a symbol of national identity. It is also an international travel document. As the summer holiday season begins, the limitations of an Indian passport in the latter role are painfully evident. Out of a possible 227 destinations listed in the Henley Passport Index, Indians do not need a visa for 31 countries and can get a visa-on-arrival to 30 countries, so they enjoy relaxed visa norms in merely 61 countries. For the rest, visas have to be obtained the cumbersome, old-fashioned way.
India lags significantly behind its peers in ease of international mobility. As many as 145 countries out of 199 were ahead of India in the latest Henley Passport Index. Compare that with Brazil, which has visa-free access to 173 countries, including those in Europe. Even Russia—international sanctions notwithstanding—gets access to 120 countries. Given India’s pride at being one of the world’s fastest growing economies, the Henley rankings caused much angst when they were released.
But the fact is that visa decisions depend on various non-growth factors. Geography is important: the Asean bloc allows visa-free travel among members, as does the European Union. Reciprocity is critical: since Brazilians need a visa to visit the US, Brazil imposes the same rule on US citizens.
Also read: Unlocking India's soft power potential
Bilateral relations make a difference: The United Arab Emirates has raised its passport strength significantly through systematic diplomacy, global investment, and by positioning itself as a key business hub. Unfortunately for India, passport strength does not depend on recent economic growth. In fact, slow-growing advanced countries tend to have higher international mobility as compared to fast-growing emerging economies.
Why it matters
Being able to travel without queuing up for a visa is a huge advantage. Tourists can take impulsive vacations. Business trips can be scheduled easily. Access to overseas medical treatment or conferences becomes fuss-free. None of these are trivial benefits: their absence has significant costs. A back-of-the-envelope calculation shows that an estimated ₹1,959 crore was paid as visa fees for the 1.4 million US visitor and work visas processed across consulates in India in 2023. Additionally, the average waiting time for visitor visa appointments was 250 days.
Passport strength is closely connected to the business environment, especially for the high-ranked countries. Countries with the strongest passports tend to be established business centres and trading hubs, with stable growth and sound enabling institutions. Not surprisingly, there is a heavy overlap between the best places for doing business and the top passport ranks. In other words, reforms that improve the business climate could help to build passport strength.
Also read: Spurned by Schengen, Indians are being swayed by the lure of liberal visas
Passport power?
Passport power measures the share of global GDP to which a passport gives visa-free access. The Henley index ranks the Indian passport at 125 out of 183 in terms of passport power, with access to 7.6% of world GDP. The usefulness of this measure is rather limited. First of all, access to some countries is more important than others. For example, Indians would definitely value visa-free travel to the US (a key destination for exports, students and job seekers) over, say, all the countries in sub-Saharan Africa.
Second, following the UAE example, India could attempt to enhance its passport strength and power through strategic diplomacy. That may win some brownie points for the government. But visa-free access to key trading partners (US, China)—which would be far more useful—is unlikely to happen. Thus, rather than obsess over passport power, it is in India’s interests to increase its share of global trade via other means such as trade treaties and import agreements.
Also read: Scant slots, lengthy waits: Where have all the Schengen visas gone?
Reality check
Getting a visa with an Indian passport is definitely a hassle. Reports suggest that the next available appointment date for a Schengen summer visa for Indians is more than a month away; processing could take another 7-20 days. But for a country beset with problems, this is practically a non-issue. Only 92 million Indians, or less than 7% of the population, have valid passports. In 2022, 21.6 million Indians travelled abroad, a fraction of the 1.7 billion domestic tourist visits that year.
At a macroeconomic level, the good news is that a weak passport is not detrimental to investment flows, critical for a capital-starved economy like India. Emerging economies made up seven of the top 20 host countries for foreign direct investment in 2022. India is also one of the top 10 with the strongest FDI prospects for 2024 (FDI Annual Standouts List). The takeaway? Visa troubles are inconvenient, but hardly critical to growth.
The author is an independent writer in economics and finance.
