In their travels around the world to attract foreign investment, Indian officials have rarely touched down in Hong Kong. And with good reason. A city that is a torch bearer for the global 'invest in China' movement is not, on the face of it, the best place to preach the virtues of investing in India.
India is still a minnow in the world of global capital flows. Where China attracts more than US$40 billion a year in foreign direct investment, only a little over US$2 billion trickles into India.
But Indian Finance Minister Yashwant Sinha, on a visit to the SAR to speak at the recent CLSA conference, seemed undaunted by the task before him. 'Hong Kong is raising capital from the rest of the world, and there is no reason a small part of that cannot come to India,' he said.
There is no doubt about the need in India for foreign investment, especially to modernise its infrastructure. Ambitious plans for a network of national highways as well as other projects are estimated to require US$200 billion over five years. The bulk of this will come from domestic investors. But the government hopes to get at least a third of this amount from overseas. This would require inflows of roughly US$12 billion a year - far higher than it has ever received so far.
With an economy that has been growing at an average rate of more than 6 per cent in the past three years, Mr Sinha clearly feels he has a convincing case to make. India's once closed economy has been opened up to foreign investment to an extent that would have been unthinkable just a few years ago. State monopolies in areas such as power, telecommunications and civil aviation have been abolished, and even no-go areas such as insurance have been opened to outsiders.
'The great distance we have travelled has not really been appreciated,' Mr Sinha said. 'Three years ago, if anyone had predicted that the insurance sector would be opened, nobody would have believed it.' Recent loosening of restrictions in real estate and defence production were equally inconceivable as recently as a year ago.