The Hindu Business Line : Investing in India makes British cos stronger, says Richard Stagg

Chennai, Nov. 28 The United Kingdom believes that both inward and outward investments – companies from other countries investing in the UK and British companies investing abroad – are good for its economy.

Making this point during an interaction here on Wednesday, the British High Commissioner in India, Mr Richard Stagg, said “we see British companies investing in India as good for Britain, as these companies become stronger, more successful and more profitable.” That was good for the overall corporate strength and, more importantly, provided them access to new markets, which they could not “capture” from the UK.

He made this point in the context of the increasing trade and investment relationship between the UK and India. The highlight of this growing relationship was the entry of Vodafone into the Indian mobile telephone market and the acquisition of Corus by Tata Steel.

Small-scale investments

“We see those as sort of headlines of what is actually a big and positive story with lots more of small-scale investments in both directions,” Mr Stagg said.

He cited the example of SCOPE in Chennai, which was the back office operations of Standard Chartered, employing more than 5,000 people at its centre – almost 10 per cent of its global workforce. This helped Standard Chartered improve its efficiency. The UK was clear that corporate actions such as these were the right thing as it helped capital find the right place where it could generate the most productive results.

The High Commissioner said financial services (banking and insurance), opening up of legal services in India to foreign firms and the retail sector to global participants as some of the areas he would like to see more progress. “Those are areas where we are still trying to make progress against a bit of a head wind,” he said.

Banking sector

On opening up of the banking sector, he said there was a feeling that there were not as many banks as were needed in India nor as many competitive offerings (in terms of products) in the market. There seemed to be a lot of hesitation about opening up rapidly. “If you do not move with speed, the other guy will overtake you,” he said and referred to the proposal to make Mumbai a financial hub. Dubai too was working on a similar proposal and unless steps were taken fast, Mumbai might lose out.

Legal services

Opening up of the legal services was another area that he felt would be beneficial to both India and the UK. A number of large UK legal firms would open up offices and because of the difference in salaries, they might actually farm out more work to their offices in India.

Mr Stagg said the UK’s efforts in increasing its trade ties with India would be beneficial to both countries. For instance, he said Caparo, a British group of which Lord Swaraj Paul was the Chairman, had set up plants in a number of places in India, from which it was supplying to automobile companies here. This was a much better model than exporting components from the UK.

Asked about the increasing foreign ownership of British manufacturing companies (Tata Steel owning Corus and Tata Motors being the front runner for acquiring Jaguar and Land Rover), the High Commissioner said this was not a matter of concern in the UK.

For instance, of the automobile brands of the 1960s, only a few existed and even those few were owned by non-UK entities. However, he pointed out, last year Britain exported more cars than ever before, which showed the UK was an attractive place to operate from.

“If we had been protectionist, then some of the brands would have steadily gone downhill and we would not have got new investments which have transformed how our industry works,” he said.

In this context, he said 10 out of the 13 Formula One cars were manufactured and maintained in the UK, which showed how successful the country had been in the high-end range.

Education

Another area that the UK would like to see more progress in its ties with India was education. There were concerns on the regulatory environment about allowing foreign entities to operate in India. At the same time, he said, it was a “bit perverse” that Nottingham University – a “quite a good British University” – had a campus in China and another in Malaysia, but none in India. Allowing foreign universities to open campuses here would be mutually beneficial, as degrees from reputed institutions could be obtained at a much lower cost than studying in the UK.

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