Virginia Gidley-Kitchin BBC World Service reporter

They were not disappointed.

Indian Prime Minister Atal Behari Vajpayee said India would grant dual nationality to some of the 20 million people of Indian origin living overseas.

Sir Gulam Noon: move will ease bureaucratic hassles

The gathered politicians, businessmen and professionals were delighted their long-standing demand had been met.

Many had to give up their Indian nationality on obtaining a foreign passport.

They said this made it difficult for them to travel and do business in India.

'Conflict of interests'

Reaction generally among the ethnic Indian community in London has also been positive, although some felt it created confusion.

Some said it would improve the possibility of obtaining property in India, others that it would boost investment and create jobs in the motherland.

There was always a very strong constituency in the security establishment that dual nationality would encourage militant activity BBC journalist Sanjoy Majumder

However, one ethnic Indian in London opposed the idea because it could create ''divided loyalties and could lead to conflicts of interests''.

But the benefits seem obvious to many.

India's neighbours, Pakistan and Bangladesh, already offer dual nationality to their former citizens, so why has Delhi taken so long to follow suit?

Development role

Sanjoy Majumder, a BBC journalist in Delhi, says one reason was old-fashioned national pride, a feeling among the authorities that emigrating amounted to a rejection of India.

''As far as they were concerned, most Indians who chose to leave no longer remained Indians and they didn't see the need to attract them back,'' says Mr Majumder.

UK Indians have generally reacted positively

''Secondly, there was always a very strong constituency in the security establishment that dual nationality would encourage militant activity in India.''

Mr Vajpayee insists dual nationality will not be an automatic right and will only apply to certain, as yet unnamed, countries.

This has led critics to accuse the government of favouring ethnic Indians in countries like Britain and the United States - people who might have money to invest and whose political support for Delhi could carry weight.

Indians in Pakistan, Bangladesh, Sri Lanka, and in several poorer countries in Africa and parts of Asia will be left out, says Mr Majumder.

He says the government fears these people would return to put a strain on social services and possibly create security concerns.

Main beneficiaries

Delhi realises that successful overseas Indians could play an important role in supporting development.

Many already make a major contribution through investment, charitable donations and lobbying on India's behalf.

It will encourage people to buy homes, to do a little bit of business, invest money in the local businesses there Sir Gulam Noon

Sir Gulam Noon, a British curry magnate who turned a family business into a multimillion-pound food empire, says the dual nationality policy will make a difference, although the main beneficiaries will be the people of Indian origin.

''Now people won't have to go through the hassle of getting permission from the various departments to go there,'' Sir Gulam says.

''That will encourage people to buy homes, to do a little bit of business, invest money in the local businesses there.''

The Chinese way

Karan Bilimoria, a Briton of Indian origin who heads the beer company Cobra and has attended the conference in Delhi, says India has been very slow to see the advantages of cultivating its diaspora, particularly in contrast with China.

''A developing country like India needs foreign direct investment,'' Mr Bilimoria says.

''India needs to grow at probably 10% a year. India started liberalising as an economy in 1991. India is always benchmarked against China and China started liberalising 22 years ago. They are well ahead of India especially in the area of their diaspora.''

China, which has always had a very strong sense of ethnic identity, certainly likes to keep in touch with members of its huge foreign diaspora through its embassies abroad.

It also welcomes them back, and they invest heavily in the Chinese economy.

Beijing does not even offer them dual nationality, although it is now thought to be considering the move.

India's announcement may spur it on.