Unlike China, India's growth is not driven by foreign direct investment (FDI), but it needs a massive $150 billion in such inflows over the next 10 years to build its infrastructure and underpin a 7-8 per cent growth trajectory.

But against a requirement of $15 billion every year, there were inflows of only $5.3 billion in 2004 according to latest estimates of the Organisation for Economic Cooperation and Development (OECD). As if all this weren't bad enough, there are disturbing reports of a protest movement spearheaded by the Left parties - crucial to the ruling United Progressive Alliance coalition - against the largest big-ticket FDI deal from South Korea to build a $12 billion, 12 million tonne steel plant in the port town of Paradip in Orissa.

Is it in the national interest to scuttle such a mega deal? To be sure, there are policy issues to be resolved at the state government level on handing over one-third of Orissa's iron ore supplies to the steel giant Posco. But surrendering to domestic lobbies, who include local industrialists as well, in thwarting this deal is seen as a terrible mistake the country can do without. If you urgently require more steel for a fast growing economy, there is no escape from investing in additional capacities. It doesn't really make a difference whether the money is domestic or foreign in origin. After all, capital has no colour!

The Chinese, for their part, have less confusion in this regard. For starters, they would have rolled out a redder carpet for their own overseas businessmen like the Gordon Wu and Li Ka-shing to invest at home. As is well known, the bulk of China's $55 billion of FDI in 2004 is from its wealthy diaspora based in Hong Kong, Taiwan, etc. In sharp contrast, India has had no such large contributions from its non-resident Indians. For various reasons, Lakshmi Nivas Mittal, the world's largest steel manufacturer of Indian origin, has only now begun scouting to set up shop in this country. But here again there is opposition to his plans.

Chief Minister Arjun Munda of Jharkhand - the state where Mittal hopes to locate -- was cautioned by the managing director of a leading private sector steel company against inviting "one-and-all" to set up steel projects in the state. "Invite companies but check their heritage, track record and shareholding pattern before throwing open the state's mineral reserves before them," added the chief executive for good measure. The chief minister, to his credit, responded that in an era of globalisation, investments could not be shut out. This is exactly the sort of attitude needed to deal with the domestic opposition to FDI.

Why is the Left opposed to big-ticket FDI? Left spokesmen, of course, deny any such opposition for the record and argue that that only the right sort of foreign investments are welcome. The right sort is one that will "augment productive capacities in the economy, upgrade the country technologically and lead to employment generation". Fair enough. But do these criteria apply when Buddhadeb Bhattacharjee, the chief minister of the Left-run state of West Bengal, eagerly solicits FDI? Does the Left protest the likes of Purnendu Chatterjee or the Japanese making investments in that state?

The Left's doublespeak on FDI is one part of the problem. A far bigger one is from segments of India Inc to a larger presence of foreigners in the country. The various apex chambers of commerce and business talk the language of reform. But deep down, they are not yet reconciled to greater FDI inflows or takeovers. The talk of level playing fields, epitomized by the formation of the so-called "Bombay Club" in the mid-1990s, still dominates much of the discourse. The point is that as long such opposition persists India will lose out in the FDI sweepstakes to emerging market rivals in an era of globalisation.

There is no point belabouring comparisons with China, which attracts more than 10 times the foreign investments India gets. The dragon is an attractive FDI destination as foreigners are impressed by its infrastructure and speed of approvals, among others issues. Even Indian companies that invest there find the business climate more salubrious than back home.

A senior executive of Sundram Fasteners, the supplier of radiator caps to General Motors, which has set up shop in the Zhejiang province in eastern China, related a contrasting picture of the environment in both countries.

For starters, the contrast was one of securing power supply. When a Sundaram Fasteners executive set up one of the company's facilities in Pondicherry some years ago, he recalled running endlessly between the electricity board and the city planning department to secure the so-called no-objection certificate. In Zhejiang, however, he was surprised by the fact that Chinese officials dropped by the facility and provided power within two weeks of applying, including a dedicated power line for five years!

No wonder the dragon has maintained an unsurpassable edge in FDI, while India remains a divided house on this matter. The absence of consensus will cost India dear and come in the way of its ability to leverage favourable conjunctures to garner more FDI. While China thus will keep attracting all the foreign investments it needs, India will remain short of the requirement of $15 billion every year to build our roads, ports, bridges, power facilities and so on.