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India needs policy to tap NRI investment By Mohammed Shafeeq, Indo-Asian News Service Hyderabad, Jan 9 (IANS) With a combined wealth of $300 billion, roughly equal to India's gross domestic product, the vast Indian diaspora across the world could help turn their native country into an economic force to be reckoned with. But this huge potential has not been tapped. And it is not because of an absence of interest among the diaspora in investing in India but because of the lack of appropriate policy, says a Confederation of Indian Industry (CII) study. Presented at the CII's Partnership Summit which concluded here Wednesday, the study calls for strong, consistent and attractive investment policies as well as a smooth implementation process that would prompt ethnic Indians and non-resident Indians (NRIs) to invest in their native land. Titled "The role of India Diaspora in accelerating industrial development in India", the study suggests a 10-point action plan for the government to increase investment by NRIs or persons of Indian origin (PIOs). It wants the external affairs ministry to maintain a comprehensive database of NRIs and PIOs, keep them updated on new economic policies and business opportunities available in India, create awareness and understanding of the investment rules, make Indian missions abroad responsible for introducing the latest policies and foreign direct investment (FDI) targets and recognise one NRI/PIO association per country. It recommends that the industry ministry offer consultancy services to NRIs and PIOs interested in investing in India, reduce procedural delays, set up state-level bodies to attract investment from the diaspora, bring in labour reforms and treat NRIs and PIOs purely as financial investors with no limiting factor of equity cap. The study -- based on the views of NRIs and PIOs in the U.S., Britain, Canada, Singapore and 12 other countries -- found that while the diaspora appreciated the process of liberalisation adopted by the Indian government, there was a general lack of understanding of most rules. It says NRIs and PIOs are interested in new technology areas of computer software, media and telecom, quality control and training. They are also keen to invest in power, other infrastructure areas and agriculture. Addressing a session at the Partnership Summit on NRI participation, prominent expatriates said India needed to do much more to encourage FDI inflow through NRI investors. Murali K. Prahlad, director of business development for Sequenom Inc. of the U.S., called for bridging the credibility gap between what India asks of NRIs and what it offers in return. He said India should understand the concerns of second-generation immigrants and set up institutions to foster emotional, cultural and intellectual links with them. CII also made a comparative study of the Indian and Chinese diaspora, revealing that while China maintained its links with its natives abroad both culturally and economically, India's focus has been more on maintaining the cultural link. According to the report, there are about 18-20 million NRIs and PIOs spread over 60 countries. Eleven countries have more than half a million NRIs and PIOs each, 11 about 100,000 each and the rest less than 100,000. While the government approved proposals envisaging NRI investments of $2.02 billion from 1991 to 2002, NRI inflows were just $1.58 billion. NRI inflows also came down from an impressive 24 percent in 1996-97 to a low of 1.9 percent of the total FDI inflows in 1999-2000. In contrast, non-resident Chinese from Hong Kong, Taiwan and the rest of Asia were the largest contributors to the total FDI inflows into their native country. Stating that India had many lessons to learn from China, the CII study points out that Beijing, through a decree passed in 1990, provided for special rules and regulations to encourage investment by overseas Chinese. --Indo-Asian News Service
