Money & Banking

Labour woos Indian business in the UK

Vidya Ram London | Updated on March 09, 2018

JOHN MCDONNELL British Shadow Chancellor   -  REUTERS

Britain's opposition Labour Party Shadow Chancellor John McDonnell speaks during a question and answer session following a speech setting out Labour’s demands for the upcoming Spring economic statement from the Treasury in central London on March 9, 2018. / AFP PHOTO / Ben STANSALL   -  AFP

There’s significant opportunity for a new FTA, says John McDonnell

British Shadow Chancellor John McDonnell reached out to Indian businesses in the UK, pledging that a Labour government would transform the country into a “high investment, high productivity, high wage, economy” that would address the “deep structural problems” facing businesses, and seek to revive Britain’s relationship with India, post-Brexit, including through a trade deal that also involved Europe.

Speaking at a meeting of the Indian Professionals Forum, a body set up last year to provide a voice for Indian professionals in the UK, in Chatham House on Thursday night, McDonnell laid out his party’s vision of a post-Brexit Britain and how to transform Britain’s relationship with India, which he argued could be “fundamental to transforming” the British economy.

“We have a different way of thinking of Britain’s relationship (with India),” McDonnell told the gathering, arguing that with Brexit and the stalling of EU-India free trade negotiations, there was “significant opportunity” for the countries to agree a new FTA that matched the specific needs and strengths of both nations.

“We want to strengthen that relationship…we need to show on the British side we understand what is needed and wanted on the Indian side,” he said.

No discrimination

Among the most pressing issues needing to be resolved related to immigration, he acknowledged, pledging a Labour party would not continue to “discriminate against students from India studying here.”

“There is no sense to fix a target and worry about the economic impact,” he said of the government’s continued controversial decision to keep international students in the net migration figures, which many believe encourages the government to maintain a tough stance on student migration that is injurious to the nation’s higher education sector.

He also criticised the “colonial nostalgia” that pervaded the Conservative government’s vision of Brexit, which he said remained a “barrier” to strong future ties with India and beyond. “We need to recognise the world economy is changing and changing fast…the balance of economic power is shifting decisively to the East.”

Tech firms, entrepreneurs

Turning to specific sectors, he highlighted the value that Indian tech firms and entrepreneurs were already having on the British economy. Changes a Labour government would bring in — including a strong industrial strategy, and a radical transformation of the financial system — would help further strengthen links and opportunities here.

Britain needed to go much further than plans currently in place for strengthening trade with India, including through a joint working group on trade and investment, he said. “We stand on the edge of a huge adventure we can work together on,” he said.

However, this would require a change of government attitude.

“The state cannot stand on one side…it’s not the case that the private sector requires no government — it requires good government and that’s what we aim to provide,” he added.

The Labour Party has in recent weeks been stepping up its efforts to converse with business, amid increasing criticism from business organisations over the direction of UK government negotiations with the EU.

The party’s decision to come out clearly in favour of a customs union won it praise from leading industry organisations, fearful of the economic impact of exiting the arrangement would have.

“You are expecting a mad Marxist to be sitting here,” quipped McDonnell at one point, during the question and answer session.

“We represent the wealth creators at every level,” he said, with the party giving renewed focus about how wealth was created as well as shared.

While the British government sought to disparage the Labour position as unworkable, and not giving Britain the freedom to arrange post-Brexit trade deals, the arrangements alluded to by McDonnell would suggest that a Labour government could push for a more complex trade deal that potentially involved the EU, the UK and India.

McDonnell also sought to address a known area of concerns for India around the shape of existing bilateral investment treaties — arguing that a Labour government would seek to avoid inclusion of investor states dispute mechanisms.

Will review BIT

“We look to review BIT (Bilateral Investment Treaty) with India in a way that is mutually beneficial and recognises how the economies have changed since signing them 25 years ago,” he said.

McDonnell’s comments come as Prime Minister Narendra Modi prepares to visit Britain for a bilateral visit and to attend the Commonwealth Heads of Government Meeting in London in April.

The visit is seen as a crucial moment for the future of bilateral relations, including trade, which has been lacklustre in recent years.

While Britain has pushed trade deals with India, the US and other nations as the future for a prosperous post-Brexit vision, India’s response has been more muted to date.

No clarity on Brexit

“We need clarity of what Brexit is about and that clarity is not there,” said Dinesh Patnaik, Deputy High Commissioner for India in the UK, speaking at the same event.

He said the UK government’s focus on Brexit was leading to it doing less to address other issues. “Nobody knows what Brexit is….Think of yourself as an Indian looking at Brexit — you are seeing one country and you are seeing 27 other countries splitting apart — where do you concentrate on?

“Do you concentrate on making the relationship with Germany, France, Spain, Italy where you have a large section of your exports and interests or do you concentrate on the UK?

“If you look at it from an Indian perspective, unless the UK gets its act together why should we be interested?”

Published on March 09, 2018

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