The Hindu Business Line : Stronger ties

Ties between India and the UK have always been somewhat exclusive in nature because of the long historical association between the two countries. The visit of the British Prime Minister, Mr Gordon Brown — his first since he took office after Mr Tony Blair stepped down last June — should be seen in this perspective to be properly appreciated. Mr Brown should be especially applauded for stating unequivocally that India had come of age and that, consequently, all major international organisations, such as the UN, the World Bank and the IMF, had to be revamped to make them more representative. His open support for India’s inclusion as a permanent member of the UN Security Council is another example of the depth of Indo-British ties, the potential of which should be impressive if guided along the right lines.

Clearly, as with other countries, the real test of the resilience of India-UK ties lies in the bilateral economic relationship. Seen against this background, Mr Brown did well to point to the rapid pace of economic development in India over the past 15 years to justify his stand that India today has to be given its rightful place in the world community. As he said, no company can be truly global unless it has a presence in India. Even so, it is also true that, in view of past links, the true potential of the economic relationship between the two countries is yet to be realised, primarily because of a protectionist attitude that is increasingly rearing its ugly head among British industry. This phenomenon is clearly seen in the IT sector, where there have been formal protests against the replacement of British jobs with Indian employment. As is well-known, this is to an extent unavoidable, given the changing realities in the two economies. Even so, the IT industry would hope that the Brown Government will resist the clamour for such a non-tariff barrier to the services trade. In fact, today, the service industry has come to dominate the India-UK trade relationship, a change from the past which may lead to an even larger Indian investment presence in the UK. As the joint statement issued at the end of Mr Brown’s visit said, while the UK was the third largest cumulative investor in India, the latter had emerged as one of the largest investors in the UK, which includes several major acquisitions, “reflecting the maturing nature of the bilateral economic partnership”.

Over the past decade, through such initiatives as the Indo-British Partnership, there has been a concerted drive to bring Indian and British small and medium enterprises together. Admittedly, some results have flowed, but it is clear that the targets have not been met. The December meeting of the India-UK Joint Economic and Trade Committee meeting in London took note of this as well as other aspects of the bilateral relationship and made helpful suggestions. Clearly, the focus should be on implementation now.

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