India yet to tap diaspora well, unlike China

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India yet to tap diaspora well, unlike China: Study- Indicators-Economy-News-The Economic Times



India yet to tap diaspora well, unlike China: Study




NEW DELHI: India has only now begun to tap its 25-million diaspora in 130 countries to boost its growth, unlike China that owes much of its
economic miracle to the overseas Chinese, says a study released Friday.

"Indian companies have tapped into the Indian diaspora less well than the Chinese firms into the Chinese diaspora," says Tarun Khanna, professor at the Harvard Business School and a contributor to the study called The Global Indian Firm.

"Thankfully, this has started to change, with India's attention drawn by successes of Indians in Silicon Valley and, prior to the current meltdown on Wall Street, as well as in diaspora communities around the world," Khanna says.

"But it is still early days in tapping this global resource."

According to Khanna, who has done several comparative studies on the two emerging economies, the post-1978 Chinese economic miracle was partly catalysed by overseas Chinese.

"Wooing the diaspora was a deliberate act that paid enormous dividends (to the Chinese). India, in contrast, shunned its diaspora. Mirroring this policy vacuum, Indian companies have generally not benefited nearly as much as Chinese companies have," says Khanna in his analysis.


Speaking at the release of the study organised by the Confederation of Indian Industry (CII) here, Khanna also said Indian bureaucrats and politicians were indifferent when it came to reaching out to the diaspora to channel investments from Indians back to their home country.

"I have had several high-ranking Chinese officials seeking help in establishing contact with Chinese individuals overseas. But I never saw a single Indian official doing so," said Khanna.

The study also points to another major weakness of Indian firms: Lack of collaboration between them.

"Consider the retailing industry. India woefully lacks formal retailing and wholesale infrastructure, relying instead on unorganised channels. Industry participants could come together to share infrastructure," said Khanna.
 

Hawk

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Article above shows different mindset of two neighbors, china is really nationalistic!
Learning from others is good thing. though late, glad india is doin it.

Reaching indian diaspora will help in intellectual capacity only, but ground action has to be taken by the indians involved in projects
 

no smoking

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Article above shows different mindset of two neighbors, china is really nationalistic!
Learning from others is good thing. though late, glad india is doin it.
No, the overseas chinese is no more nationalistic than overseas india.

The reason they invested so much in mainland is CCP had tried best to convince them that it would be a profitable decision and the gov would set up a business-friendly environment for them. And we all know the following: CCP kept the word, the overseas chinese made the money, china developed.

So, the only thing can attract the diaspora is the smell of money.
 

EnlightenedMonk

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LF, you're also disapora... why don't you try and sponsor a poor child through his life ???

For example, I'm a poor needy child who is yet to get his Penthouse, his S-Class Mercedes, a company for him to become CEO in...

I mean, you could start by helping this poor boy... :D
 

hit&run

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[mod]flame bait[/mod]
 

F-14

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the reson is that the GoI dosent totally understand the power house that its dispora carry for example in the UAE Indian's make up almost 60% of the Population and hold considerable postions of influance in economy there are many preminent indian bussines tycoons in the UAE
like
Yusuf ali CEO and founder EMKE group of stores
Dr BR shetty Co founder and MD of the NMC hospital divison and UAE exchange conglomerate he also is a member of the abudhabi chamber of commerce(ADCC)
etc so you see we inspite of our goverment help our nation intrest
 

thakur_ritesh

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true to our nature rarely have we learnt to be proactive and well this is not the first time we are trying to emulate a chinese method, but then in a system where a babu takes a call, and where technocrat's role is only limited to present some report where they form a part of a committee where again the chairman happens to be a babu, in such a system one does not expect intelligent decisions be taken and later be implemented. it took india to be near bankrupt to realise the importance of reforms, liberalisation, foreign investments and this happened a good 12 years after the prc had done the same.

this particular report shows the mindsets of 80s and prior to that have still not changed where NRIs are still not seen as a part of national building process. as so well pointed out by no smoking, one has to show the roi but then why would individuals who do not have much clout bother to make investment in a system which is highly corrupt, where red tap still exists, where rather than being welcome they would be suspected as to why they are making investments in the country, and where eventually the whole process seems a harassment more than anything else, then why would individual investors take a plunge.

india, has to learn to respect the investments that flow into the country, make sure the NRIs are made into assets and our ambassadors to attract investments where they themselves make investments and invite others to make investments in the country. high time we made the single window clearance a norm than exception for all overseas investments heading our way be it from MNCs, individuals, venture capitalists, and with that also made sure any investment heading to the country from that time and to start a project the time taken should not be more than 100days, or else as has happened so many times in the past, we will keep repenting the mistakes that we seem to have made a habit of.

it will be good that rather than some rhetoric on gujarat and its cm, the GoI took some lessons from the government of gujarat, and for this they dont even need to go to the prc, but then who would take such pains or the whole political plot will be lost!
 

no smoking

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[mod]hit & run's post removed, no point replying to such flame baits.

thanks.[/mod]
 
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LF, you're also disapora... why don't you try and sponsor a poor child through his life ???

For example, I'm a poor needy child who is yet to get his Penthouse, his S-Class Mercedes, a company for him to become CEO in...

I mean, you could start by helping this poor boy... :D
My Family has done many things, especially my Father but in those days Indian Govt was against outside help and burecracy made many things difficult if not impossible. I donate to charities annually, some that my Father started;I have visited personally on trips to India. I still think better marketing is needed by Indian Govt in some areas,many in the diaspora would like to contribute but have no idea how?including myself; much of the IT boom India enjoys is from the disapora based in US Silicon valley .EM you sound very needy why didn't you reveal your plight earlier.LOL
 

RPK

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NRIs treated as Not Required Indians! - India - NEWS - The Times of India

Indubhai Amin, a non-resident Indian (NRI) settled in the UK earns interest income of Rs 3 lakh on his non-resident ordinary account bank deposit in
India in the current FY 2009-10. Enjoying his personal exemption limit of Rs 1.60 lakh and the eligible deduction of Rs 1 lakh u/s 80C, Amin is comfortable paying income tax of Rs 4,000 in the first slab of 10 per cent on his effective taxable income of Rs 40,000.

Flat tax of 20% and 30%

A huge shock awaits Amin and millions of NRIs, in regard to taxation of their interest and investment income and capital gains earned in India, proposed to be treated under the draft Direct Tax Code as "income from special sources."

In 2011-12, on the same interest income of Rs 3 lakh, Amin will be required to pay a hefty tax of Rs 60,000 at the flat rate of 20 per cent, without being eligible to claim any basic exemption or other deduction, as provided under rule three of the First Schedule to the Code.

Moreover, all capital gains earned by a non-resident will attract a flat tax of 30 per cent, irrespective of the amount of capital gains. While a resident Indian will be required to pay tax of Rs 3.84 lakh on his taxable income of Rs 25 lakh, an NRI earning equivalent capital gains will be called upon to pay almost double tax of Rs 7.5 lakh.

Hair-raising drafting

New section 13 (2) provides that such ‘special income’ shall be computed in accordance with the provisions of the Ninth Schedule, the drafting of which is literally hair-raising. It provides that the amount of accrual or receipt shall be computed as the taxable income, and no loss, allowance or deduction shall be allowed, as the same shall be presumed to have been granted. The only exception in this regard, in respect of capital gains arising from the transfer of equity shares or units of equity oriented mutual fund chargeable to STT, is quite amusing, as it stands redundant in view of the proposal to abolish STT (a classic instance of incoherent drafting).

The draftsman does not seem to have realized the harsh implications. It means that if an NRI sells a capital asset purchased for Rs 10 lakh at Rs 30 lakh, he will be required to pay tax of Rs 9 lakh at 30 per cent on the gross sale consideration of Rs 30 lakh without any deduction even for the cost of acquisition of Rs 10 lakh (not to mention any benefit of indexation on the same).

Determination of residential status

The residential status of an individual under the Code is proposed to be determined as per the current norms. However, the status of "not ordinarily resident" (NOR) is proposed to be eliminated. Despite the above, Clause 24 of the Sixth Schedule has still provided for exemption in respect of interest earned on foreign currency deposits in the case of NOR. Poor drafting indeed!

The Code has proposed to retain the current exemptions availed by a non-resident in case of interest earned on NRE and FCNR deposits with banks.

Special exemption for returning NRIs

A useful exemption has been provided in case of income earned outside India, if it is not derived from a business controlled from India, in the financial year in which the returning NRI becomes an Indian resident and the immediately succeeding financial year. However, the benefit of the said exemption would be available, only if such individual was a non-resident for nine years immediately preceding the financial year in which he becomes a resident.

Wealth-tax liability for NRIs

Proposed Section 102 of the Code provides for wealth tax liability in the case of the value of all global assets of an individual or HUF. However, an exemption has been provided in case of the value of assets located outside India in case of an individual who is not a citizen of India or an individual or HUF not resident in India. Hence, while returning NRIs who are non-citizens will enjoy wealth-tax exemption for their overseas assets, NRIs with Indian citizenship becoming residents will attract wealth-tax liability on such assets held abroad.

Illogical exemption under wealth-tax

Talking about wealth tax, the Code prescribes an exemption in respect of any house or plot of land belonging to an individual or HUF, if it is acquired before April 1, 2000. It is difficult to understand the logic as to why this exemption has been denied in all cases where such immovable property is acquired after March 31, 2000!

Proposals That Will Hurt the Global Indian Sentiment

Flat Rate of Tax

20% flat tax on interest & other investment income
30% flat tax on all capital gains
Apart from 20% & 30% TDS on above, TDS at a baffling rate of 35% prescribed on all residual income

No Personal Exemption

No personal exemption or deduction allowed in computing the above income treated as ‘income from special sources’.

Weird Interpretation

Poor drafting leads to such a weird interpretation that transfer of a capital asset may attract 30% tax on gross sale consideration.

What Discrimination!

Ironical but true! Non-Indian sportspersons, say Ricky Ponting or Shoaib Akhtar, required to pay a concessional tax of 10% on their game, advertisement and column earnings in India, thus enjoying a more privileged tax status than our own sons of the soil living abroad
 

Hawk

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On tax system, india has faced higher inflation due to tax concessions to NRIs, and its not unveiled truth that NRIs invest in India mainly due to tax concessions.Most NRIs dont wish to return back and with introduction of new tax norms, NRIs may look for newer markets, but it will be hard to find better market than India which is giving good returns, even with taxes! As mentioned earlier, Indian diaspora can only provide intellectual help n not physical, which is the need on hour
 

F-14

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that is a gross underestimation of the NRI what we send as remmittences play a vital part in the countries Froex upkeep we are also key in bringing a sort of demand that you are just getting up to and just to push us as Intel investors is a total mistake on your part do you have any idea how we love our nation or how hard we work for our motherland so dont talk to much about what we do
 

Known_Unknown

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I think Hawk is mostly right. After all, the reason most people move overseas is because life is much easier and comfortable outside than inside India. They don't go out of patriotism. It's natural that they would also invest in India if they found that they were advantages there that most other countries could not offer them-no one invests out of patriotism.

I do think, however, that a large majority of ethnic Indians outside India still have family back home and are hence more acquainted and comfortable enough with the Indian system that they would prefer to invest there than anywhere else, especially if they are getting high rates of return.
 

F-14

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i do agree with certain points that Hawk has raised but NRI's like me have families back home and there are many who want to invest in India but Alas investment climet is fraught with burucratic hurdels this i can attest to in my home state of kerala and when we go back we also face a sort of apathy from both the people and the Goverment
 

ajay_ijn

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Indias tops in remittances figure. Its 45 billion USD in 2008. This is mroe than Indias FDI. But the question is where are being invested, FDI indicates long term benifit for India and that company investing believes in Indias growth story. Remittances does play a vital role in raising standard of living of Indias poor but the money saved has to go into places where its most needed like infrastructure in rural areas.
 

F-14

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but ajay the thing that i worry about the most is actually on 2 fronts
1 is Govermental and social apathy to NRI's in India of which i am a vetren suffer
2and the sheer amount of laziness that is exibited by the Avarage NRI With regards to Investement of capital in india but the Indian despora also have a major problem its lack of political Unity in order to push its and India's Interst at large
 

ajay_ijn

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if one is looking only for returns, then there is not much difference between a foreigner investing in India and an NRI because the only objective for both is returns. Moreover foreign investors be it corporate or institutional investors, PE investors, banks, development agencies are also is very much bullish on long term prospects of India.

Any country would want long term investors, investors who believe the growth story for long term, investors who do not immediately run away with global problems or temporary slowdown, investors who are patient enough to wait for returns with projects many years to mature.

with NRIs, there is a bit more expectation that their funds could flow to areas like human development, education, health which are badly needed for betterment of poor while accepting low rate of returns.

if there could be mechanism to raise money for such projects for social benifit with low rate of returns, it would be gr8.

an good example would be funds for micro-finance organisations. the traditional lender charges 20 to 30% per annum for microfinance in India. It would be gr8 if funds from other sources could greatly reduce that interest rate.
 

ajay_ijn

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but ajay the thing that i worry about the most is actually on 2 fronts
1 is Govermental and social apathy to NRI's in India of which i am a vetren suffer
I am not aware of problems faced by NRIs with Govt regulations. can you shed more light on this.

BTW if i am not wrong. NRIs would create far more assets in India than the countries where they reside in. I haven't heard any NRI till date who invested less in India compared to other countries.

In my community much of the saved money would towards consumption of family members back in India or real estate i.e purchase of agricultural lands etc.
 

F-14

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its not that we suffer due to govermental policy but its things like the following

the Lack of govermental support and subsides for returining blue and lower rung NRI eg:construction workers to find work or set up business in india

the lack of counsular support for NRI's in distress

lack of better air services by national carriers like Indian which provides outdated

Airbus A300B aircraft in the Sharjah -Kochin sectors

the exhtrobraten prices charged by state air carriers like air India
an up and down ticket cost about AED 10000 which is out of reach of many blue collared workers

lack of frinchise or voting rights this has been a long tearm demand of all NRI and by not providing a voice to the Despora India is not taking in to account a vast majority of its own people's voices this leads to the painful qustion are NRI's just Milch Cows

that is why many NRI's when they come to India ask people not to Become an NRI it is due to experince but our people thing otherwise

but still what you said is true

NRIs create far more assets in India than the countries where they reside in
 
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'India must fashion diaspora policies like China's' - The Economic Times

'India must fashion diaspora policies like China's'


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.
 

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