MUMBAI: When Lakshmi Mittal, steel billionaire, recently sealed an agreement to invest $9.3bn in the mineral riches of eastern India, it was tempting to conclude that the Indian diaspora had symbolically come full circle. Nearly three decades after leaving a modest family business in India, the Calcutta-born tycoon was taking a leaf out of the Chinese diaspora's largesse towards its own country and investing his overseas billions in his homeland.
India has long been in thrall to a high-achieving diaspora that has promised much by way of investment back home but, with Mr Mittal's exception, has failed to deliver. With rising economy, a youthful and educated population and profitable old and new businesses, the relationship between India and its émigrés may be poised for a radical shift.
India's 20m expatriates are known as Non-Resident Indians or, within India, by the acronym NRI, symbolising a band of star achievers in business, technology and academia. They are lionised in India. In return, they never cease to pester for further reform in the homeland. Take, for example, Indian technology entrepreneurs in Silicon Valley, until recently the only NRI business constituency attractive to institutional funding. They may have opened a rare window on India for global capital and drafted India's foreign investment laws in technology; but as a source of NRI investment flows, their effort remains work in progress.
Ideally, the relationship between India and its diaspora should have been collaborative - typified by Chhattisgarh, an underdeveloped state where the steel plant will be built, and Mr Mittal, an entrepreneur who last week followed his Indian coup by acquiring a steel plant in Ukraine. Instead, India and its NRIs have endured a love-hate partnership.
Their mutual pique usually peaks each year at an Indian government sponsored conference called Pravasi Bharatia (Indians Living Abroad). NRIs demand privilege and access and criticise government performance. Their hosts' duck under a volley of complaints from motel owners in Texas, shopkeepers in London and manufacturers in east Africa.
Unsurprisingly, NRI investments since reforms a decade ago have been negligible. None of the top 10 big-ticket foreign investments of the past decade, bar the one by Mr Mittal, easily the largest by an expatriate Indian, "has been NRI in character", says an Indian trade official. The consequence is that, whereas a decade ago NRI risk-takers may have been cultivated to add momentum to or even start reform, today they are viewed differently because of two mutually reinforcing factors.
First, with a strong economy, India does not need to kowtow to NRIs because others, including western companies, are willing to invest. Nor does an economy destined, according to Goldman Sachs, to develop into the world's third largest by 2050, need to chase the capital of the few large NRI business groups in the UK or US in the questionable belief that only they can handle the nuanced risk management necessary for a politically rocky environment.
Today, capital is not only global, as Indian fund-raisers are discovering. With home-grown multinationals such as Tata and Reliance gaining global scale and acquiring assets overseas, India can look to its own backyard, as well as attract large investors witness the latest move by Vodafone to take a stake in Bharti Tele-Ventures, India's largest mobile services company. Indeed, the growth of large Indian companies hungry to expand overseas has challenged the diaspora, triggering a reverse process: foreign direct investment by Indian companies in the UK last year exceeded that of British companies in India, says the Federation of Indian Chambers of Commerce and Industry.
Second, and arguably more enduring in its impact, is a shift in the demographics of the diaspora. Indian managers, bankers, business academics and other professionals have risen significantly in number, notably in North America, and supplanted the traditional voice of the NRI community -- the entrepreneur as a catalyst for change in India.
Indian managers are reaching the upper end of western companies such as Vodafone, Citigroup, Deutsche Bank and Pepsi and acting as an influential, if not decisive, voice within companies previous ambivalent towards investing in India. At entry level, foreign companies are snapping up Indian business school graduates.
Finally, a large community of Indian-educated scholars of business at US universities is playing a fundamental role in guiding investment to the Indian market and shaping business from India for global markets. CK Prahalad and Krishna Palepu of Michigan and Harvard -- business schools have emerged as the poster-boys of the Indian business advisory circuit: Mr Prahalad's study of spending power among lower income earners in India persuaded Tata to expand into budget hotels.
After a dearth of investment by traditional NRI risk-takers, these new factors are pushing investment towards India. Rumours of their death may be premature, but being an NRI may no longer be sufficient or necessary for investing in India.