The role of the diaspora in the development of their states of origin has been well recognised. India has the world?s second largest diaspora next to China, and with a substantive presence on all six continents. Their contribution to India?s economy and society is a matter of pride for Indians the world over. The diaspora has transferred knowledge and expertise, added to India?s income and has recently mediated the massive entrepreneurial energy that has led to the rise of India?s IT and ITeS sectors. But there is now need to involve the diaspora more centrally in the Indian development strategy of inclusive growth.
The Pravasi Bharatiya Divas organised by the Ministry of Overseas Indian Affairs (MOIA), the Overseas Indian Facilitation Center, and the Confederation of Indian Industry (CII) this week in New York is an innovative public-private partnership attempting to maximise involvement of the diaspora.
The diaspora can contribute in key areas such as investment, joint ventures with Indian entrepreneurs, education, including strengthening skills, health, and infrastructure. Two million overseas Indians in the US enjoy a per capita income of over $60,000, and occupy key positions in academia, industry, healthcare and other service sectors. Overseas Indians elsewhere are beginning to gain similar stature. They now want to be part of India?s post-1991 growth story. We just need to remove the irritants in the way. The MOIA, in collaboration with CII, can play a catalytic role in involving the diaspora in India?s development.
The Indian diaspora is well poised to invest in the small and medium enterprise (SME) sector, and in retail. To encourage this, we need to immediately eliminate the reservation policy for the small-scale sector and, over time, allow 100% FDI in the SME and retail sectors. These would draw in innovative new entrepreneurial skills and allow a large inflow of investment.
India?s diaspora includes several prominent names in the academic field and there is scope for private diaspora-led investment in private higher education. Indian educated professionals have strong links with their alma maters. If FDI-led JVs were allowed in higher education, there is wide scope for creating technical institutes that draw from the best in India?s academia and combine it with European and US investment, expertise and research networks. Such JVs could draw from the expertise of a growing number of professionals, including retirees, who have specialised skills that can be accessed at least on a part-time basis. This will also offer them an opportunity to profitably invest their capital in such ventures. Doctors, engineers, scientists and professors are all eager to hop aboard. The quality of Indian human resources could thus be raised.
To promote such a phenomenon, India needs to create low transaction cost mechanisms that provide a coordinating and information clearing function to match the expertise of these professionals/retirees to specific institutions. This is a novel way to upgrade skills and tide over the manpower crunch. However, this is predicated upon allowing diasporic FDI in the education and health sectors.
New and creative mechanisms need to be found to tap diaspora entrepreneurship for India. Partnerships with Indian stakeholders provide the diaspora a firmer footing and surer way to deal with local risks. The JV model can be extended to production and marketing ventures between the Indian corporate sector and the diaspora. Again, for this, we need to lift FDI restrictions.
A 20-million strong diaspora can make a big difference to India?s inclusive growth strategy. It is encouraging that the government and the Indian private sector are already trying to make this happen. But for something incredible to happen, more effort is needed.
?Jayanta Roy is principal advisor, CII. These are his personal views