Giving Back to India Investment Opportunities and Challenges

ANJALI SAHAY

Introduction HE OPENING OF INDIA to the capitalist world in the 1990s was an important step in the liberalization process that brought huge benefits T to the country in the years to come. Coinciding with this process, the Indian government has worked in parallel with its large and vast diaspora spread across the globe to tap into India and its resources to further strengthen ties with its homeland. The Indian government has been trying to harness the potential of this partnership, described as strategic, in various ways as a win– win scenario to promote India’s growth and development. Even before the 1990s, the then Prime Minister of India, Rajiv Gandhi, had taken important steps to tap into the potential of overseas Indians. As quoted by T.P. Sreeni- vasan, former Indian permanent representative at the UN, “the Diaspora and India discovered each other in during Rajiv Gandhi’s time. Now things have changed as the Diaspora and India look to each other.1” As currently rein- forced by India’s Prime Minister, Dr Manmohan Singh,2

India is a land of opportunity that places premium on enterprise and creativity…. I invite you, the Overseas Indians, to make use of the

1 Gurumukh Singh, “Diaspora Connect: Indian Metros to get five PIO Universities,” http://www.indUSAge.com.au/indus-tree/indus-tree/16229-diaspora-connect-indian- metros-to-get-five-pio-universities-.html (accesssed 2 May 2012). 2 “Overseas Indian Facilitation Center,” http://www.oifc.in/ (accessed 10 September 2013). 82 A NJALI S AHAY

investment and business opportunities that India now offers. This is the time for all of us to become strategic partners in India’s progress. While the Indian government has taken strong steps to encourage its diaspora to invest in its home country, the progress of these investments has been modest at best. In the twenty-first century, much has been written about the role a diaspora can play in the economic development of its country of origin. Strong examples are the Chinese, Mexican, and Jewish diasporas, whose con- tributions to their countries of origin far exceed those of the Indian diaspora. More initiatives need to be taken by the Indian government to engage with its diaspora with its unique knowledge and networks, and to forge productive business partnerships and promote trade and investment-flows from all over the world to India. With a current look at this symbiotic relationship, this research essay takes a fresh view of the current strategic partnership between the Indian government and its diaspora in areas of investment and explores the political and economic roles that the Indian diaspora can play in their home country by using such strengths as (a) wealth and entrepreneurial abilities, (b) educational achievement and networking, and (c) political clout, such as lobbying efforts, in harnessing an ever greater economic growth for India. On an interesting note, remittances to India are the largest in the world but do not constitute a significant percentage of India’s GDP. Diasporic FDI, in comparison with remittances, falls significantly short as a source of investment for India. This essay highlights some of the key changes made by the Indian government to attract more diasporic FDI and concludes with some key recommendations on what needs to be done further to positively engage with its diaspora.

Indian Diaspora: Wealth, Spread, and Resources India, with the second-largest diaspora in the world – some thirty million people3 spread across every major region of the world serve as an important bridge to access knowledge, expertise, resources, and markets for the development of India. Stephen Cohen pays a glowing tribute to the Indian diaspora in the USA for lobbying effectively for India and improving considerably

3 Although most sources record over twenty-five million overseas Indians, the current estimate is closer to the above figure.