Vidya Ram

Big challenge for India, UK will be restoring trade

Vidya Ram London | Updated on January 22, 2018 Published on November 18, 2015

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The question of whether India-UK bilateral trade and economic relations would improve in the wake of Prime Minister Narendra Modi’s visit to London was the subject of discussions at a summit in London this week, at which participants expressed cautious optimism about the future of the relationship.

The relationship will depend in part on the successful introduction of an India-EU Free Trade Agreement, said Stephen Adams, Partner of consultancy Global Counsel. “Business has done a very good job working in the absence of such an agreement...There is an extent to which the lack of a strategic agreement is holding us back,” he told delegates at the Bloomberg TV summit on Tuesday.

Delegates noted that one of the big challenges would be restoring trade, which has been falling significantly (down 9.4 per cent in the year to 2014). “Part of the problem has been a mismatch in terms of what they want to get out of the trade relationship…the interest in the FTA is very asymmetrical,” said Adams, who added that “India has not been a huge exporter so the attraction of the EU market has bee quite limited…where pressure is strong in areas such as IT services.” He also warned that to become a successful exporter India would need to follow China’s model of being willing to import industrial inputs rather and “plug into the global supply chain” rather than attempting to keep everything domestic.

“A huge wave of expectation has been created…but you still have to work through existing people and mechanisms and all the frustrations you know of if you deal with India on a regular basis,” said Colin Coulson-Thomas, Director of UK Europe at the Institute of Directors (India), who warned that there remained a danger of expectations disappointing.

To succeed, the UK/India trade relationship has to look to future technologies rather than focusing on past technology and collaboration. Given the advances in technology, it would also be essential for India to open up professional services to those from abroad, he said, noting the closed nature of several services.

Arbinder Chatwal, Head of India advisory services at BDO, welcomed the trade deals announced during Modi’s visit but said there remained plenty of room for improvement, particularly in the ease of doing business. “I work with mid-market companies… and the challenges they face… are around corruption and perceptions of corruption. The UK Bribery Act is a huge issue for them.”

Sumit Jamuar, CEO of SBICAP (UK), said there remained great reasons for optimism — given the size of India, its population and complex systems. “You have to understand it’s got a federal structure and its own special characteristics and some of these things take time.”

Published on November 18, 2015
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