India yet to tap diaspora well, unlike China: Study

September 4th, 2009 - 3:35 pm ICT by IANS  

New Delhi, Sep 4 (IANS) 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.

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