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How the UK reacts to globalisation is one of the most important issues facing the UK Government. To know how to react, it is necessary first to understand the real nature of the challenge. The decision to undertake an inquiry into India was born of an often-expressed concern that the UK is making less of its opportunities than our global competitors. Representatives of both the Indian Government and the UK and Indian private sectors expressed their concerns that our unique relationship with India should be generating a much higher level of trade and investment than was actually the case. The Committee undertook this detailed examination of trade and investment relations with India to learn about the specific issues in this vital trading relationship and to inform the Committee's wider work on the actions the UK must take to remain competitive.
India's economy is the fourth largest in the World with the second largest population, of 1.1 billion. Awareness of the developments in the Indian economy has grown sharply in recent months. Our Report found, however, that the UK's understanding of what is happening in India is still only partial. We were concerned that the UK's perception of India has been seriously distorted by the media's focus on the perceived threat to UK jobs from outsourcing, particularly from call centres, creating a view that these centres are the dominant feature of the Indian economy. We saw in India that the true scale of business process outsourcing (BPO) goes far beyond call centres. We also saw the growth of manufacturing industry of considerable quality in the automotive and aerospace sectors and the vast opportunities for the UK's higher education sector.
There are three themes that flow through this Report and which should be regarded as our principal conclusions on which our more detailed recommendations are based.
First, that the UK is not as engaged with India's markets as it should be. Despite our long history of commerce with India, UK companies are falling behind their major competitors, perhaps because UK companies tend to see India as a source of low-cost labour rather than an emerging market in its own right. The UK needs to be far more entrepreneurial in its approach to India if it is to take advantage of the huge opportunities this vast country has to offer our companies and institutions.
Second, the Indian market is liberalising at a rate not always fully appreciated in the UK. Constant vigilance is needed by those wanting to do business with India, if the fullest advantage is to be secured by them from this progressive liberalisation. However, uniform and continuing progress cannot be assumed and UK diplomacy must continue to urge the Indian authorities to continue on their chosen course—and to demonstrate by example in world trade talks our own country's adherence recognition of the merits of liberalisation.
Third, that the UK's institutional arrangements to support trade with and investment both in and from India are characterised by enthusiasm but also by confusion. A great deal of good work is being done, but by too many overlapping bodies with ill-defined responsibilities, and often inadequate resources. Viewed from India, the UK is a small country, and our efforts need to be far more focussed to have a real impact.
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