Over a thousand people of Indian origin from all over the world are congregating in New Delhi this week for the annual Pravasi Bharatiya Divas. The list includes luminaries from all walks of life — political leaders, academics, business persons and civil society — with one thing in common, deep roots in India.
India is fortunate to have the largest diaspora after China, numbering about 25 million people across 110 countries. Overseas Indians have distinguished themselves wherever they have settled, contributing immensely to local economies and cultures. Today, they are adding to India’s development as well, with net private transfers at $ 27.2 billion in 2006-07. Four factors have deepened their interaction with India in recent years.
One, the Indian government has taken concrete steps to revitalise the bilateral relationship through initiatives such as the establishment of the Ministry of Overseas Indian Affairs, the Overseas Citizen of India facility and the annual gathering and honouring of diaspora representatives. Two, the diaspora has become more prosperous after years of struggle and hard work. Second and third generations have built on their ancestors’ fortitude to emerge as thriving members of their communities.
Three, India itself has been rapidly developing, its GDP expanding at close to 9 per cent for the past several years. The restructuring of its economy is offering fresh opportunities to the world at large. Finally, globalisation has intensified, strengthening the connectivities between India and the world economy. As multinationals flock to India to take advantage of its manufacturing and services sector proficiencies and its huge consumer markets, overseas Indians are their managers of choice.
How can the revitalised interaction of India and its diaspora achieve its maximum potential? The two emerging areas of mutual interest are economic interaction and interaction in the field of social development.
India’s economic growth is accompanied by the emergence of a diversified knowledge industry base and high manufacturing skills. Indian companies today can match the world in standards of quality, productivity and competitiveness. This proficiency has enabled them to drive the growth of new sectors such as automotives, biotechnology, engineering and design. Indians who had left the country due to a dearth of business opportunities now find that the opening of the economy offers a range of new possibilities.
A key area of engagement for overseas Indians is the new knowledge economy of India. PIO/NRIs have high academic and professional skills, offering a reservoir of talent and expertise in all areas. Their ideas and innovation can help turn India’s economy into a global knowledge leader.
However, investment into India by the diaspora is still limited, considering that a high proportion of overseas Indians are engaged in trade and business in their countries of citizenship. Less than 5 per cent of foreign direct investment is estimated to arise from PIO sources. A recent official statement pegs investment proposals from NRIs at 25 for 2006, compared to 49 for 2004.
Anecdotal evidence suggests that this is changing as overseas Indians are setting up private equity and venture capital funds, and are scouting the country for investment opportunities. The good news is that India operations of established overseas funds are often headed by PIO/NRIs, and the resurgence of Indian companies is attracting their interest.
Lack of information and absence of investment platforms may be a factor in hindering investments from overseas Indians. Typically, PIO/NRIs may not have large funds at their disposal either. There is need to pool resources and offer advice and information to spur fund inflow into productive sectors. The Overseas Indian Facilitation Centre has been recently established for this purpose.
In the social development spectrum, health and education are emerging as the areas of choice for overseas Indians. Much needs to be done in these two spheres and each initiative can provide succour to deprived sections of society. Overseas Indian organisations are entering at the grassroots level to set up model schools, provide education infrastructure, run free clinics and health camps, and work with state governments. Individual PIO have also been undertaking work with women and the girl child, nutrition or primary healthcare. There are inspiring stories of overseas Indians transforming the villages of their ancestors.
Such initiatives can be replicated manifold as the level of interest has reached a tipping point. Again, the information gap is a challenge that needs to be addressed.
The diaspora’s engagement with India in social and economic fields cannot be carried out in isolation. Adequate support structures must be in place at all levels, down to the grassroots, in order to actuate intent. While the central government and some state governments are active in establishing partnerships with the diaspora, lacunae exist in certain regions and sectors. Industry associations can play a key role in addressing business and investment partnerships. Civil society and not-for-profit organisations must also come forward to activate productive and sustained ventures in health and education.
Tarun Das is Chief Mentor, CII