India must fashion diaspora policies like Chinas

New Delhi: One of the most distinguishing characteristics of China`s economic rise has been the exploitation of its diaspora and India should fashion more policies to attract the wealth and investment of its own expatriates, says Maruti Udyog Ltd`s first CEO Upendra Kachru.

"Unlike the Indians, the Chinese have viewed their diaspora as a major resource to aid their country`s economic development. They have fashioned policies to attract the wealth and investment of this group, and it has yielded handsome dividends," writes Kachru in his new book "India: Land of a Billion Entrepreneurs".

The book examines what it takes to become a successful entrepreneur and explores the possibility of India emerging as an entrepreneurial nation. It delves into the history of entrepreneurship, examines the qualities required for it, presents the stories and experiences of many Indian inventors and entrepreneurs, and looks at opportunities that India can use to promote entrepreneurship.

The author says that nearly 80 per cent of the massive foreign direct investment pouring into China during the early years of reform came from the Chinese living overseas.

"One of the most distinguishing characteristics of China`s economic rise has been the exploitation of its 57 million nationals dispersed around the world. The results have been dramatic. Two-thirds of China`s FDIs come from overseas Chinese investors. This group has not only contributed monetarily but also has been involved in the modernisation of China`s industry, agriculture, science and technology, and defence," he writes.

Diaspora contribution to their state of origin, according to him, has been made in various ways, through remittances, transfer of knowledge and entrepreneurial networks, and FDI.

"The Indian diaspora is investing in India, but not in the classic manner. Unlike China, where the diaspora has focused on FDI, India has gained advantage from other avenues rather than from investments from the diaspora. One of these is remittances, which has added to India`s income.

"In India the share of FDI of the Indian diaspora in total FDI inputs between 1991 and 2007 was just around five per cent. Compare this value with China, whose diaspora has FDI accounts for 40-45 per cent. This means China has hundreds of thousands of entrepreneurs entering the country infusing capital into the local entrepreneurial base," the book, published by Pearson, says.

Kachru finds this trend surprising, especially as the Indian diaspora are an economic and political force to reckon with in a large number of nations and people of Indian origin constitute a global community of over 22 million people. It is bigger in number than populations of many countries of Europe.

"Some explain the reason for India`s failure to tap investments because of the different characteristics of the Chinese and the Indian diaspora. They attribute this to the fact that most Indian expatriates are in professions such as education, health services, science and engineering, while the Chinese diaspora is much more business-oriented."

According to the author, India has largely ignored people settled in Mauritius, Fiji, British Guyana, South and East Africa, and so on, populations that would have been interested in investing in small manufacturing in India, given the size and purchasing power of the market.

"China, unlike India, has attracted most of the investment in manufacturing from the Chinese settled in other Asian countries. India`s focus is different. It is difficult to attract investments from professionals and even traders of Indian origin (retailers, wholesalers or other type of service providers) settled in the developed countries. They often lack the learning process in managing export-oriented labour- intensive manufacturing."

But Kachru is not pessimistic. He says India has an advantage in that its diaspora is spread around the world in countries whose political and economic systems have closer resemblances to the prevailing systems in India.

"Therefore, under the right circumstances, I believe that India has the potential to gain more than what China did from its diaspora."