India, Nov. 11 -- The US midterm elections showed that rhetoric aside, the economy matters. Cracks are visible in the western and Chinese economies. Capital has already started to flow back to Indian markets. However, what India needs is patient, long-term capital. Schemes like foreign currency non-resident (FCNR) deposits are a palliative measure at best. While they may attract short-term capital flows, these concessional swaps will cost the Reserve Bank of India (RBI). The solution is to attract long-term, stable foreign direct investment (FDI) and build exports.

To attract sustainable foreign investment, India needs clear rules and predictable outcomes across its legislative, executive and judicial institutions. Take the recent approv...