FDI in India - view for the next decade

During the last decade Japan invested US$ 107 billion in Asia. Of this China took 28 billion, Indonesia 15.3 billion, Thailand 12.6 billion, Singapore 11.5 bl, Hong Kong 10.5 billion, Korea, Malaysia & Philippines around 6 each, Taiwan 4.6 and India a mere 2.3 billion (2.14%).

Honestly, this is like a picture.. worth a thousand words, tempting enough to say no more.

This picture speaks of the dismal economic diplomacy of successive Finance Ministers and External Affairs Ministers. Developing countries are like borrowers or start ups. If a start up cannot make out a case before the venture capitalist, he is sunk. If the borrower cannot have the good sense of finding a 'happy to lend' bank, he's gone. India's case has been some what like this. It just did not go borrowing to the right places and finds itself struggling to compete with China, which attracts some 60 billion dollars of FDI each year.

Since the last decade, we have been reading in news papers about some LOOK EAST Policy being pursued in the South Block. Perhaps, it only means few more 'Invest in India' visits by babus and politicians alike. Nothing serious. Had the pursuit of FDI been serious, India could have successfully wooed Japan. In fact, Japan is a country, which has given India a unique place in its history. I have not heard of memorials of Indian leaders elsewhere in the world like the shrine of Subhash Chandra Bose and Justice Pal. Religious links, such as of Buddhism and industrial links such as the success of Suzuki were advantages that we failed to capitalise.

It is also eye opening to analyse trade figures. India's trade with Japan has increased from US$ 3.783 (1990) to around US$ 5.6 billion in 2005. Compare this with Japan international trade of US$ 1 trillion ! Now picture this... Asia accounted for 50% of Japan's trade, while 'shining' India accounts for 0.5% ! If India's exports to USA are US$ 13.2 billion(2004-05), why our exports to Japan should be a lowly US$ 2.6 billion(2004)? And lets not forget that Japan is the world's second biggest economy after the USA. So much for central economic planning and facilitation.......

Another interesting lesson begging to be learnt is how politics and economics have been divorced every where in the world except south Asia. China - Japan and Korea - Japan tensions involving visits by the Japanese PM to the war shrine or on some forlone Islands in the middle of the ocean, have always earned sufficient media attention. Every now and then countries in the region will coerce Japan to apologise for war crimes (by the way, that's the 2nd world war.. and not to forget that they were the ones to suffer the atomic bombs). In 2005 there was wide spread vandalism against Japanese investments and Japanese expats in China. Yet, in a survey conducted by JETRO (Japan Extrenal Trade Organisation), 71% of the Japanese investors polled indicated that they planned to increase investments in China in the current year. Now, also factor that 27% of Japanese FDI in Asia found its way to China and that China is the number one exporter to Japan. Does it explain some thing. Is there a perspective missing in India's officialdom?

If it were a case of mere components missing in the perspective of India's officialdom, the situation could have been remedied. Its worse. There is the problem of a cancerous component in the perspective.......call it posturing. India's obsession for 'showing big boys their place' has stigmied economic progress. Be it home grown Industrialists or foreign investors, Indian bureaucracy and politicians alike, love revelling in brow beating them and screaming that we are not pushovers. While China has in the last 25 years, with its quiet and humble approach attracted US$ 600 billion worth of FDI and in the process lifted 400 million people above the poverty line, we only boosted our egos by as much.

Before I log out please mull over this....... Japan's JETRO numbers India's middle class at 17 million and China's at 400 million. Russia and Brazil's middle class is also shown to outnumber that of India's. So now you know where the money is heading.