The following is a post that first appeared at NRIMatters.com, where I will be a regular contributor.
NRI Matters is a new effort by digital agency Experience Commerce, the Confederation of Indian Industry and the Ministry of Overseas Indian Affairs to reach out to NRIs (non-resident Indians) and PIOs (persons of Indian origin). It’s about time!
For many years since the great wave of emigration from India during the 1960s, 1970s and beyond, India maintained a rather arms length relationship with the departed non-resident Indian (“NRI”). Overseas remittances were grudgingly welcomed by the Indian government, but it did not cultivate strong relationships with NRI communities nor did the country welcome inward investment.
In any case, those who left for distant countries, often Canada, the United States and the United Kingdom, but also many other places, busied themselves with building new lives for their young families, and they yet had little wealth for investment into India. Now that is all changing. The Indian government increasingly realizes that the NRI community can provide a valuable contribution to India’s modernization and growth. In turn, the NRI community has matured, setting deep roots in business in their countries of residence and NRIs have also built a grand base of wealth. The task now at hand is for the Indian government and NRI communities abroad to find a mutually beneficial way to deploy a strategy for combining the opportunities and challenges faced by the former with the expertise and resources of the latter.
In the eyes of many NRIs and non-Indians alike, India remained suspicious of and closed to foreign investment into the early 1990s, that is until the balance of payments crisis prompted the initiation of economic reforms. Prior to this the investment opportunity set for NRIs was limited to such things like the high interest savings account at a state-owned bank to which my father remitted a few tens of thousands of dollars with the promise of doubling his money in a few years (I’m not sure he came out too far ahead after taking into account the rupee’s depreciation).
I traveled to India in 1983 with my parents. Looking back, it was an idyllic and quaint backdrop for an 11 year old Punjabi boy to spend a carefree few months away from grade school. It was my first visit since my family emigrated to Canada when I was age three. Back then, bicycles, scooters, tempoos and auto-rickshaws dominated the roads. Life was reasonably pleasant if you were part of the middle class, but hardscrabble for the vast majority. Aside from basic agriculture and processing, small-scale retail, cottage trades and a limited number of professions (doctor, lawyer), there was little visible business activity, at least nothing that displayed any economic vibrancy.
I returned to India for another long visit 10 years later, following the beginning of early stage reforms. Change was hard to discern, but upon a closer appraisal it was apparent that Indian life was advancing, if at a glacial pace. Noticeably, there were more scooters and cars on the streets, many homes in my grandparents’ village had purchased a television and we had piped drinking water from a village tank for a few hours a day (although we long had had our own electricity powered well pump in our courtyard).
Busy completing school and beginning my career, I did not give much thought to India and its growth story for another decade. In 2002, I was working for an investment fund in New York. We received daily economic reports that covered the globe. At the time, the investment community was in rapture with the China growth story. But I noticed that the India story increasingly surfaced within the mountain of trade and economic statistics, although as an afterthought and driven by India Tech’s Y2K fix notoriety. And there was the opportunity, catching the India growth story in the early stages. I made my first business trip to Mumbai in 2004. India has made significant economic progress during the last decade, but tremendous early stage opportunities remain for NRIs and others.
Family and friends who know I am doing business in India express a typical weariness, even cynicism, of the pitfalls they know or believe they know so well – bureaucratic foot-dragging and corruption. And after so many years experience I have three ready responses. I tell them that I have personally not experienced any corruption and that the bureaucratic delays I have faced outside India have often been greater than within. And while I am not blind to the fact that corruption in India is an issue that needs to be addressed, I remind them that corruption and rent-seeking in more advanced countries can be just as prevalent but is perhaps more sophisticated (and hence buried under surface sensibilities). Finally, I tell them that bureaucracy does not negate the existence of the investment opportunities. If you can get past the perceived and actual negatives of doing business in India that so many NRIs remember and apply patience and the innate cultural advantages an NRI possesses, you have the basis for navigating India’s investment potential.
Yet, as I have learned during the past six years, at least two other factors are important for successfully investing in India (and perhaps anywhere else). Unless you have a significant and influential contact network in India, it is important to find a trusted local partner for guidance, opening doors and taking care of minor snafus. Second, be prepared to spend significant time on the ground identifying, developing and managing your venture directly. That is sound general business advice, but critical for developing a venture distant from home.
The investment opportunity set in India spans virtually every economic sector, so there are opportunities for small, medium and big business – agriculture, food processing, real estate development, energy, technology, green-tech, finance and health care are among a few. The key for NRIs is to step boldly into opportunities within their knowledge and experience sphere and to leverage their family and other connections. Initiating the process is as simple as getting on an airplane, planting your feet on the ground and getting a little dusty while you investigate the possibilities.
And to those young Indians, some perhaps who have spent little time in India, I advise what I told a new MBA seeking career advice: Go East, to Mumbai, where the economic game appears set to be more vibrant than in the west.
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Filed under: Featured Posts, India, NRI Matters Tagged: | Confederation of Indian Industry, Experience Commerce, how to do business in India, India, india business, india corruption, India economy, India GDP, india investment, indian bureaucracy, investing in india, license raj, Ministry of Overseas Indian Affairs, non-resident Indian, NRI, NRI community, person of Indian origin, PIO