In this week’s newsletter, we talk about whether India can step up to become the world’s largest coffee exporter, the H-1B visa debate, pizzas and more.

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Quote of the day 📜:

“Never spend your money before you have it.” - Thomas Jefferson

Can India fill the shoes of the top coffee-exporting nations?

Indian coffee exports are brewing up a storm!

For context, in FY24, India exported a whopping $1.2 billion worth of coffee. That’s close to an impressive 10% growth over the previous year. And now, in just the first few months of FY25 until October, Indian coffee exports have already crossed the $1 billion mark.

Sounds promising, doesn’t it?

But what’s really behind this impressive surge, you ask?

Let’s take it from the top.

India produces two main coffee varieties ― Arabica and Robusta. Robusta accounts for the lion’s share, accounting for over 70% of India’s coffee production. Naturally, it’s also the star player in India’s export game. 

To add to this, Robusta beans are a favourite for instant coffee manufacturers worldwide, thanks to their strong flavour and affordability. Some premium brands even blend Robusta with Arabica to create their instant mixes. For instance, recently, the demand for instant coffee has soared in markets like Russia and Turkey. And since about a third of India’s coffee exports consist of instant coffee, this surge in demand has directly boosted our numbers. 

However, the steep rise in global coffee prices is the real game-changer. Robusta prices have touched multi-decade highs this year, climbing more than 60% in 2024 alone.

If you’re wondering why, it’s because of supply issues in major coffee-producing countries. Just look at Brazil, the world’s largest coffee producer. It has been dealing with erratic weather patterns — droughts and extreme heat, thanks to climate change.

Meanwhile, Vietnam, the second-largest supplier, is hedging against unpredictable climate risks by shifting some of its focus to growing Durian, a pungent fruit that’s seen a 400% surge in global demand. With profits like that, it’s hard to blame them for the switch.

So, with these giants struggling, Indian coffee has stepped in to fill the gap.

But the real question is, can we keep this upward streak going?

It turns out there is scope!

Look, Indian coffee has a uniqueness that sets it apart from its global competitors. It’s grown in natural forests using traditional methods. In fact, India is the only country where all coffee is grown under shade, hand-picked and sun-dried. Elsewhere, coffee farming often involves chopping off existing vegetation, but in India, the forest canopy stays nearly intact.

This eco-friendly approach aligns perfectly with the European Union’s Deforestation Regulation (EUDR), which bans coffee imports from regions deforested after 2020.

And let’s not forget, India’s sun-drying process is way greener than the mechanical dryers used in Europe that contribute to carbon emissions.

But it’s not all smooth sailing.

Now, even though Indian coffees are the most sustainably grown, the EUDR compliance burden on growers can be huge as it requires technological and financial resources. It demands precise proof that no deforestation is linked to the coffee beans entering the EU markets.

This simply means Indian growers will now need expensive tech upgrades like GPS mapping and digital traceability systems, which small farmers can barely afford. And when you throw in endless paperwork, audits, certifications and compliance, it quickly starts to look like a nightmare!

To tackle this, the Coffee Board is working on a platform to help Indian coffee producers comply with EUDR. But since it’ll take some time to roll out, our coffee exports to the EU might face some bumps in the road in the meantime.

Also, India is not the only country producing sustainable coffee. Ecuador, a South American nation, is far ahead of us in this respect. In July 2023, it exported its first container of sustainable coffee with deforestation-free certification to Italy. The coffee was certified through rigorous monitoring and enforcement using satellite imagery and third-party verification. 

So yeah, we really need to ramp up our efforts before other nations rally ahead of us!

Plus, India is not immune to the effects of climate change. Erratic rainfall patterns harm the yield and quality of coffee. And sudden or unseasonal rains complicate the drying process, as all our coffee is sun-dried.

Another big challenge for Indian coffee farmers is the rising cost of production. Over the years, their expenses have shot up, mainly because of rising labour costs. You see, almost the entire cultivation process here is manual. There’s no fancy machinery like in other coffee-growing countries. To put things in perspective, in Brazil, labour makes up just 25% of the total production cost, but in India, it’s a whopping 65%. That doesn’t leave much room for profits.

That’s also why many farmers are walking away from coffee cultivation altogether. They probably feel like it’s just not worth it with rising labour costs and shrinking profits.

And if that wasn’t enough, rising shipping costs are adding to the headache. The Red Sea, which offers the shortest and cheapest shipping route through the Suez Canal, has been disrupted by tensions in the region. When a rebel group based in Yemen called the Houthis started targeting commercial vessels, exporters had to take longer routes, which hit their profit margins hard.

So yeah, there are quite a few hurdles to tackle before India can truly become one of the top coffee-exporting nations.

But then, even with these challenges, there’s room for optimism. Right now, India’s global coffee export share is just around 4%. And one way to boost this is by increasing exports to China. Just think about it. China was once mainly a tea-drinking country, but now, instant coffee cafes are popping up everywhere as more people develop a taste for coffee. In fact, China’s coffee imports have nearly tripled over the last 10 years.

If we can expand our presence in markets like China, which is home to nearly 50,000 branded coffee outlets and growing fast, we could grab a bigger slice of the global coffee market pie.

And maybe that’s one way India could step into the shoes of the top coffee exporters.

Are H-1B Visa holders snatching American jobs?

In 1990, President George Herbert Walker Bush signed the “Immigration Act of 1990” and introduced the H-1B visa programme. The idea was simple — help American companies fill vacancies in specialised fields like research, engineering and computer programming by temporarily hiring skilled foreign workers.

But over time, the programme became a hotbed of controversy. Just think about it. If foreign workers started taking up jobs in your country, wouldn’t it feel like your chances of landing one were shrinking? That’s exactly how many Americans started to feel too.

And this unease has fuelled endless debates about whether H-1B visas help or hurt, even sparking divisions within President-to-be Donald Trump’s team.

During Trump’s first term as President, he wasn’t exactly a fan of the programme. He thought it was unfair to American workers and introduced restrictions in 2020, arguing that it allowed employers to replace locals with cheaper foreign labour.

But fast forward to now, and things seem to be shifting.

Trump’s new allies like Elon Musk and Vivek Ramaswamy, who’ve been tasked with leading the US Department of Government Efficiency (DOGE), are rooting for reforms to strengthen the H-1B system. And now, Indian-American Sriram Krishnan’s appointment to Trump’s team as a senior AI policy advisor has sparked talks about removing country-specific caps on employment visas. This could let more H-1B holders live and work permanently in the US, which could be a game-changer.

To put things in perspective, every year, the US Citizenship and Immigration Services (USCIS) hands out 65,000 H-1B visas, with an extra 20,000 reserved for those with master’s or doctorate degrees from US institutions. But here’s the catch. There are way more people applying than the number of spots available. So, the system turns into a lottery. And many eligible applicants miss out purely because of bad luck.

And here’s where things get even trickier.

You see, Indians make up over 70% of the H-1B visa recipients, while China takes around 12-13%. The rest go to countries like Mexico, Canada, the Philippines, Taiwan and Korea. But these visas are valid for only 3 years and can be extended to a maximum of 6 years. And if visa holders want to stay longer, they’ll need to apply for a Green Card or Permanent Resident Card, which allows them to live and work in the US permanently. The catch though is that there’s a cap on how many Green Cards each country can receive. No more than 7% of the total can go to workers from a single country, even if there’s an overwhelming talent pool waiting. So, if those country-specific caps were removed, it could open up more opportunities for Indians looking to work in the US.

But you can imagine that not everyone in America shares that optimism. Some Trump loyalists like Steve Bannon (former White House Chief Strategist), Nikki Haley (former Governor of South Carolina) and Laura Loomer (political activist) argue that foreign workers are taking jobs from Americans. And they’re not alone. Recent surveys show that 60% of Americans believe the country already has enough skilled workers to fill these roles and doesn’t need more.

But do their worries actually make sense, you ask?

Well, if you look at it from the lens of tech companies, their argument may be valid. After all, some of the biggest employers of foreign workers in the US come from the tech world, including global giants and four Indian tech majors like Infosys, TCS, HCL and Wipro. Together, these companies account for about 35% of the top 10 H-1B visa beneficiaries.

If you’re wondering why, well, hiring Indian employees is often cheaper for these companies. Many Indian workers are willing to accept lower pay than their American counterparts, allowing companies to save on wages while still offering a pay raise that looks impressive by Indian standards.

For context, in 2023, almost 70% of the H-1B petitions approved for Indian professionals were for salaries under $100,000 per year, even though the average IT salary in the US was around $104,000. This means that Americans might have had to lower their pay expectations to compete for these jobs. And that has led some to argue that foreign workers are driving down wages for domestic employees.

But here’s the twist. Immigrants on H-1B visas might actually be benefitting Americans more than people think. Yup. Because think of it this way. Immigrants and native-born Americans don’t always have the same skill set, which means they’re not always competing for the same roles. Instead, they’re collaborating, filling in the gaps where needed.

When immigrants spend their earnings in the US, it creates a ripple effect. More demand for goods and services means companies grow, rather than moving operations overseas. Plus, immigrants often start their own businesses, adding even more jobs to the US economy. Not just that. They bring fresh ideas and innovation that fuel economic growth and create more opportunities.

And it’s not just us saying this. The numbers back this up. A study by the American Immigration Council found that from 2004 to 2023, and even during the pandemic, fields like science, technology, engineering and mathematics (STEM) consistently had low unemployment rates. So, the demand for skilled workers was actually more than the supply.

Moreover, it suggests that H-1B workers don’t really earn low wages or drag down the wages of their domestic counterparts. In fact, the average wage for an H-1B worker was $108,000 in 2021, compared to $45,800 for US workers in general. And between 2003 and 2021, the median wage of H-1B workers grew by 50%, while the average wage of US workers rose by 40%. So it’s like employers who hired H-1B workers often offered them wages above the Department of Labor’s “prevailing wage” for similar jobs.

And let’s not forget that between 2010 and 2019, US companies like Moderna, Johnson & Johnson and Pfizer, who later helped develop COVID-19 vaccines, hired over 3,300 scientists, including biochemists and chemists, through the H-1B programme. Many of the doctors on the front lines during the pandemic were also H-1B visa holders. So, maybe that’s the bigger picture Americans haven’t fully considered yet.

On the flip side though, here’s something for Indians to think about. If the US clamps down on H-1B visas, the flow of skilled Indian professionals might shift back to India. And India might just be ready for it. With improved infrastructure, a skilled workforce, and a booming ecosystem for global capability centres (GCCs) in fields like AI and robotics, the country could absorb this returning talent. But even if H-1B aspirants are concerned about their quality of life in India, other countries, especially in Europe, might swoop in and grab that talent instead.

So yeah, no matter where the H-1B visa debate goes, it’s not going to drastically change things for most Indians. We’ll only have to wait and see how the Trump administration navigates this.

Jargon of the day ✏️:

Today's Discussion 🤔: How Domino's became the world's #1 pizza chain

Back in 2009, Domino’s was going through a rough phase. Their sales were on a decline and they were struggling to maintain a good reputation. At that time, Domino’s was all about bad pizza.

But what changed?

Enter J. Patrick Doyle, who joined as CEO in 2010. He made efforts in changing narratives from Domino’s being in the pizza-making business to the pizza-delivery business.

Now, they focussed on bringing modern tech and delivery mechanisms through warming ovens and a pizza-tracking app to make sure customers were a part of the experience.

You see, they not only introduced new strategies, but also revamped old ways. 

Domino’s ran ads featuring real reviews from customers and they were anything but positive— “worst pizza I ever had” and  “the crust tastes like cardboard”. 

Doyle publicly appeared in these ads to address the comments on their quality. He apologized and promised to work tirelessly to improve their pizza. The way they embraced their shortcomings turned negative comments into positive beliefs. 

Today, Domino’s runs over 20,000 stores worldwide and is the biggest pizza chain in the world. 

Answer of the day:  The Indian company Avenue Supermarts Limited (ASL) owns and operates the DMart retail chain. 

And that's all for today folks!

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