A year in the life of a nation is the briefest of moments. But a year in politics is quite enough to make evaluations and measure indications of progress. I think a very promising start has been made to revitalise the potential of India by Prime Minister Narendra Modi and his government. I hope that, in the years to come, this enthusiasm and this activism will be sustained. It will take much more to move forward.
But all journeys start with a beginning and the past year has been a very good beginning that gives us high expectations for the future, particularly in the area of business and economics. From the perspective of someone based abroad but who has invested in India over the years, there are some concrete steps the government can take to further involve the large NRI community.
Economically ‘Make in India’ is a great initiative with every chance of success because India has the skills and resources to make it happen. Hopefully, we will never again see the speculative, casino-type stock market ventures like those of the early 1990s.
For over 30 years, in fact since 1982, I have been urging the introduction of clear-cut policies, with transparent rules and consistency in application — no special breaks for anyone.
Foreign investment is essential for India’s development. Those who want to invest in India should be able to see what it entails. If they can abide by the rules, they are welcome. If they can’t, they are free to go elsewhere. Until now, investment rules have been made in favour of India’s business community, who have demanded special terms for themselves and stifled competition. That has scared off people who want to make an honest investment. Not only has the country lost out on that investment but this ‘kissing by favour’ approach has been a major source of corruption.
Many business people and commentators have forgotten the basic fact that nobody can take inducement unless it is offered. The talk of low-level corruption being endemic is, I’m afraid, often the case, but it is encouraged by businesses looking for a quick fix. If people lower down see those at the top openly engaging in corrupt activities then they say to themselves, ‘why not, I’m just a poor man’.
The Union finance minister is taking action to confront this by introducing new measures like simplifying tax systems and avoiding unnecessary litigation and making a very determined effort to remove obstacles. I am particularly glad that he has made it very clear that while India seeks inward investment we should not become a tax haven or a host for hot money.
The NRIs can be a great source of investment in India. They are the face of India around the world. Many have earned great respect internationally in their respective fields. They should be encouraged in the same way that China encourages its expats — and it is they who have made China such an attractive destination for international investors.
In the early 1980s, the late Indira Gandhi and the then Union finance minister Pranab Mukherjee made concerted efforts to bring NRIs into the mainstream of the economy. Sadly, their vision was sabotaged by vested interests in the Indian business community.
At that time, I was one of the first to substantially invest in India. But the business community was frightened by my investment and interest exposed the fact that corporate abuse was rampant in most of their enterprises. They were running public companies like private fiefdoms. No corporate governance, no shareholders interest and no transparent financial reporting. The so-called owners actually had very small shareholdings of their own and felt threatened when this was made public. Their lobbying campaigns to keep NRIs out have largely succeeded since then.
A few simple things can be done to mobilise large amounts of NRI capital for India’s benefit. First, when the NRIs invest they should be treated at par with resident Indians. This is not just for the money that they invest but because the NRIs are just as loyal and often display greater pride in their heritage than residents.
Second, fix a minimum investment figure for the NRIs. Any amount above that entitles the investor to an Indian passport. Granting an Indian passport doesn’t confer any benefits on the holder other than a great sense of pride.
Third, PIO card holders are expected to carry it in addition to their passport, even though their passport contains a visa based on the PIO. The PIO is an unnecessary document and serves no purpose.
If the Modi government’s policies are to succeed, they require large amounts of international investment — and NRIs are an obvious source of it.
Internationally, India now has a higher profile than in recent decades and our global esteem has been enhanced. Largely due to the prime minister’s efforts, the world’s eyes are now on India.
Last year I was in India just before the election. When I visited again last month I observed a sea-change in attitudes and atmosphere. There was a positive aura and a new confidence in the future.
As a consequence, British Indian business should prosper. There is now the desire on both sides to do more, especially in technical transfers, IT and education. Many British universities would like to be more involved in India. India should bear in mind that there are several institutions of higher learning that are geared to their expectations, especially those that have close associations with industry.
India has a large reservoir of talented and hardworking young people who want and need to be better trained in order to develop their skills. They could become a great asset to India and to the world. Establishing links with British universities that are keen to do more in India would help achieve that.
Swraj Paul is a member of the House of Lords and founder-chairman of the Caparo Group of industries
The views expressed are personal