India beckons as an investment destination, with the right policies now in place. It can tap into UK’s expertise in education, health and renewable energy.
Three years after David Cameron arrived in India in July 2010, New Delhi has once again rolled out the red carpet for the British Prime Minister who has put strategic cooperation with India on a strong wicket. That India has figured twice in his agenda of bilateral visits in a three-year period is perhaps telling enough of India’s importance in the context of its geo-strategic, economic and global positioning.
This time too, it promises to be no different for Cameron, a self-confessed admirer of Sachin Tendulkar, who is expected to highlight signs of the new ‘Special Relationship’ with India that his Government has promised. There are expectations of a reassurance to help double the bilateral trade by 2015 and on driving British investments to India.
Cameron’s visit comes at a time when the multi-faceted historical and cultural ties between India and UK have already seen upgradation to a ‘Strategic Partnership’ that encompasses areas such as civil nuclear energy, space, defence, combating terrorism, economic ties, science and technology, education and culture. Since 2010, it has scaled the heights of ‘Enhanced Partnership for the Future’.
The depth of this relationship is evident in the economic sphere. Despite the global meltdown, bilateral trade and investment remain one of the most important underpinnings of our bilateral relations, now being supported by a Joint Economic and Trade Committee (JETCO) to tackle trade and investment barriers on both sides and promote business links.
Two-way merchandise trade during 2011-12 stood at $16.3 billion, surpassing $12.7 billion seen in 2010-11. Investments are not far behind. Total investments (equity) from the UK into India during the period April 2000 to November 2012 stand at $17.08 billion and vie well with Indian investments into the UK. The UK stands at third position worldwide and first in the EU when it comes to investment flows into India. India too has been the third largest inward investor in the UK during 2010 and 2011, with 97 inward investment projects generating 6,096 jobs over the past year.
Even as the UK continues with measures to battle the economic slowdown, India on its part has shed off the policy paralysis and pushed ahead with reforms which have made the country extremely attractive to FDI and portfolio flows. It is hard-selling the lure of a huge rural hinterland with growing prosperity and a market being touted as the future driver of growth that an investor can ill-afford to ignore.
Today, there is scope for British companies to invest in our infrastructure projects, partner with Indian companies in setting up National Manufacturing & Investment Zones (NMIZs), participate in the ambitious Delhi-Mumbai Industrial Corridor project as well as contribute to managing urban infrastructure, particularly the mass transit system. Besides, there is an immense potential for collaboration between India and Britain in sectors such as skills, education and research, health and renewable energy.
FICCI has taken several initiatives in covering critical areas in partnership with counterpart UK organisations and other stakeholders and with these the task of bridging gaps and taking ties to the next level has only got easier.
Take FICCI’s pivotal role in the UK India Business Leaders Climate Group, launched in February 2010 under the patronage of Cameron. A FICCI policy paper has recommended three possible areas of collaboration towards a strategy on climate friendly economic growth and to find pro-business, pro-growth solutions to combat climate change.
These are: an appropriate policy framework for enabling private sector investments in low carbon projects, financing of low carbon technology deployment and collaboration between India and UK for developing innovative financing mechanism for low carbon projects.
Quite in sync with our government’s priority of strengthening competitiveness of small and medium industries, FICCI in partnership with UK Trade and Investment (UKTI) has created the FICCI-UKTI technology transfer and cooperation programme between India and the UK. While FICCI is in the process of assessing technology need and gap areas of Indian industry and understanding their readiness to work with UK-based SME technology providers, UKTI is working on identifying potential UK tech-focused SMEs across the chosen sectors that could possibly provide the technology requirements coming out of Indian industry. In this regard, FICCI has conducted a survey among Indian industry and preliminary findings have been shared with UKTI.
Our government’s focus on a national skill building campaign finds resonance in a UK India Skills collaboration effort by FICCI, which is partnering UKIBC to steer the UK-India partnership on skills.
Since its inception in 2009, the UKISF has emerged as a very strong network of skills-oriented organisations, higher education institutes, companies and education service providers from both UK and India, driving a skills development agenda.
The rapidly growing connect between India and the UK, their desire to forge a mutually beneficial partnership and FICCI’s avowed objective to guide India’s expanding global engagement have found expression in a volume Reconnecting Britain and India: Ideas for An Enhanced Partnership.
The book, which brings together 36 thought leaders from the world of business, politics, academia, arts and the media, includes the reflections of Prime Ministers Manmohan Singh and Cameron.
So, as the two leaders reaffirm their commitment to walk hand in hand on trade and investment issues and other matters concerning the interests of both countries, there must also be an awareness of the need to do away with constraints.
Among the major issues for India in the UK are restriction on professionals and skilled workers on account of UK curtailing movement of professionals, skilled workers and students from India.
TAXATION AND FDI
India would also favour UK consider evaluating the effect of taxation on businesses and individuals. Corporate and personal taxes are higher in UK and some cuts will be a welcome concession for inviting greater number of Indian businesses into the UK.
London would clearly like to see a system of one-stop shop to facilitate entry into the country of companies with business plans for India and a comprehensive, equitable government support for small and large businesses alike to do business with India. It would also like further clarity on the FDI policy in retail sector with companies like Tesco keen to open multi-brand retail stores in India and an investor-friendly method of resolving queries and grievances needs to be in place.
What is reassuring amidst all this is that the positives between the two countries have rekindled the urge to reach out for higher trajectories of growth in the realm of trade, investment and cooperation in diverse areas.
(The author is President, Federation of Indian Chambers of Commerce and Industry (FICCI).)