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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 881-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE trade and industry committee
trade and investment opportunities with india
Tuesday 28 February 2006 MR KARAN F BILIMORIA and DR SHAILENDRA VYAKARNAM Evidence heard in Public Questions 229 - 306
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Trade and Industry Committee on Tuesday 28 February 2006 Members present Peter Luff, in the Chair Roger Berry Mr Brian Binley Mr Peter Bone Mrs Claire Curtis-Thomas Mr Lindsay Hoyle Miss Julie Kirkbride Rob Marris Mr Mike Weir Mr Anthony Wright ________________ Memorandum submitted by Indo British Partnership Network (IBPN)
Examination of Witnesses
Witnesses: Mr Karan F Bilimoria, CBE, Chief Executive, Cobra Beer Ltd, and Chairman of IBPN, and Dr Shailendra Vyakarnam, Director of Centre for Entrepreneurial Learning and Board Member of the IBPN, Indo British Partnership Network, gave evidence. Q229 Chairman: Gentlemen, welcome to this evidence session on the Committee's inquiry into Trade and Investment Opportunities with India. Can I begin by asking you to identify yourselves, please, for the record? Mr Bilimoria: I am Karan Bilimoria, founder and Chief Executive of Cobra Beer and the UK Chairman of the Indo British Partnership and the founding Chairman of the Indo British Partnership Network. Dr Vyakarnam: I am Shai (short for Shailendra) Vyakarnam. I am Director at the Centre for Entrepreneurial Learning at the Judge Business School, Cambridge University, and I am a director of a few small businesses and various other affiliations and I am on the Board of the Indo British Partnership Network. Q230 Chairman: Thank you. We are now becoming if not quite experts at least quite familiar with the structures in the UK to support trade and investment with an interest in India, but I just worry that sometimes to the outsider it could look like quite a bewildering plethora of initials and initiatives. I wonder if you can just explain to us exactly how the IBPN fits into the overall picture and what value it adds? Mr Bilimoria: India started its liberalisation process in 1991 and Britain and India were pretty quick off the mark to take this occasion as an opportunity to take the relationship between the two countries on a trade and business level to a high level, and John Major and Narasimha Rao, the Prime Ministers at the time, in 1993 formed the Indo British Partnership Initiative, which later became the Indo British Partnership. It was a way of engaging with the private sector in both countries to help increase trade in business and investment both ways between the two countries. At the UK end, the Indo British Partnership was always supported by the British Government, and a private sector chief executive has been appointed as the Chairman every few years. When it was launched, it started off in a very big way. Concorde was chartered to take a delegation across, Britannia was sailed across, a lot of investment and effort was put into the Initiative. Later on, the Initiative did lose its momentum over the years, and we celebrated the tenth anniversary of the Indo British Partnership Initiative in India in 2003. It was decided then that the Initiative had a lot of potential and needed to be revived, so I was appointed as the UK Chairman in July 2003 with a specific remit to revive this Initiative because it had lost momentum. It took me a long time actually to revive it, to initiate and start the Indo British Partnership Network as a way of implementing the Initiative, to set up a Board, to set up a membership organisation, supported by UK Trade and Investment. Q231 Chairman: What value does it add? UKTI does its work, the RDAs do their work, there is JETCO now, which has been established relatively recently, there is the Asia Task Force, which seeks to draw the attention of British business to wide opportunities in Asia; with all of this work going on, are you convinced that the Network actually adds value to the sum total of the relationship? Mr Bilimoria: At the time I was appointed, we found that there was a policy existing where UKTI were focusing on sectors, helping business through sectors, dividing business up into sectors, and were not focusing on promoting markets or countries, such as India. One of my challenges was to persuade Government that, yes, you look at things from a sector point of view but you have got to look at countries, like India, as a market, it has got to be markets and sectors, not markets or sectors. To the extent that there was no funding available, the head of the South Asia Unit of UKTI used to have 36 individuals in that Unit just five years ago; today there are six people in that Unit. Of course, 80 per cent of the work done in the South Asia Unit at UKTI is India-related, and in those five years India has grown, on average, between six to eight per cent year on year and UKTI have reduced the resources from 36 people to six people. My great challenge was to say we need this Initiative because British businesses throughout the country, particularly the SMEs, are not aware of the opportunity of doing business in India and investing in India and doing business with India and we need to make them aware of the opportunity, we also need to help them to do business, to guide them, point them in the right direction and help them capitalise on the whole area. It did not exist, and this was a great way of engaging with the private sector and for the private sector and the Government to get together, which was not happening. Q232 Chairman: We want them to succeed and one of the reasons the Committee is having this inquiry is our concern that Britain is not being sufficiently entrepreneurial in its relationship with India, and probably also with China and Brazil and Russia and other emerging economies, so we want them to succeed. I am not clear actually what it is you do, because your very good document Doing Business in India, which you have kindly passed to the Committee, seems to say basically "Go and talk to UKTI and they will help you." Are you a PR operation or do you provide actual services? We value the PR operation, but what is it? Mr Bilimoria: I presume that you have received the submission, apart from the guide to doing business, of the Indo British Partnership, its background and actually what are our objectives. The objectives are very simple: to help increase bilateral trade, business and investment between Britain and India, both ways. We have, in a short time, with actually relatively very small amounts of funding, we are backed by UKTI, for which we are very grateful - - - Q233 Chairman: Initially you were backed by UKTI? Mr Bilimoria: The plan is that for the first three years we are backed by UKTI and after that the plan is to be self-funding. The sorts of sums of money we are talking about are not very large for what we are doing. Q234 Chairman: What is the sum we are talking about? Mr Bilimoria: The first year's funding was £70,000; on top of that, we have raised sponsorship to the value of about £10,000. Relatively speaking, really it is a very small sum of money, when we are talking about dealing with the second-largest country, in population terms, in the world, and one of the fastest-growing economies in the world. The figures are quite stark. The trade in goods and services between Britain and India, both ways, amounts to £6.4 billion, that is one per cent of Britain's overall trade of just over £600 billion, so we are scratching the surface. If you look at the submission, the objectives are very clear, but, in terms of what we have achieved, the company was incorporated in April 2005 so it took me over one and a half years actually to convince Government that we needed this initiative to be in place, that we needed a membership organisation that people could join, that we needed an initiative that was going to help promote business between the two countries. We were incorporated in April 2005 and, since that time, in the submission you will see the list of various activities that we have engaged in. As a Board, we meet twice a month, we have two‑hour Board meetings, extremely well attended, UKTI sit at the table, quite often we have the Foreign and Commonwealth Office present as well, if there are members of the British High Commission team in India in the country they attend the meetings as well, and it is the private sector, with Government backing, addressing the issues of doing business and promoting doing business with India. Q235 Chairman: I want to get on to some of the questions you hinted at in that very helpful answer just then. For example, the list of events you are planning says: "A programme of proposed forthcoming events includes regional business seminars in Birmingham, Manchester and Glasgow/Edinburgh..." That is very useful to draw to the attention of the smaller and medium-sized businesses. How will you contact these businesses, will the RDAs do that for you, will you hire UKTI, the Chambers of Commerce; what mechanism will you use? Mr Bilimoria: The way that these regional events operate is that, for example, we had one in Derby which was organised by the local region. Q236 Chairman: The Regional Development Agency? Mr Bilimoria: Yes, the Regional Development Agency, the local Business Links get involved, and they invite local businesses to come and attend, and there is growing interest; these events sometimes are oversubscribed by 50 per cent. Q237 Chairman: How many did you have at Derby? Mr Bilimoria: In Derby, we had almost 200 people. In Warrington, Cheshire, we had an event where they had budgeted for 60 people and the room could take a maximum of 80 people, but in the end they had about 50 or 60 more on top of that who wanted to come, so there is a growing interest. Q238 Chairman: Were they businesses which wanted to come, or were they public sector employers who were networking and finding out, or were they actual companies? Mr Bilimoria: There were lots of local businesses there and there is genuine interest. What we are doing is providing the private sector input, but it is the Government-backed initiatives, like Business Links, UKTI with their trade advisers around the country, who are there to organise these events, we go there, speak at the events and give the private sector perspective and advice. The good thing, from my personal point of view, is that when I talk I am talking not only as Chairman of the Indo British Partnership but as somebody who walking the talk and doing business with India myself, through Cobra Beer. Q239 Chairman: I understand that, and your name is well known and probably you are the only household name on the Board of the company, some household name companies are there. Do you feel you are overshadowed slightly by the Asia Task Force, which has rather bigger companies involved with that? Mr Bilimoria: When we decided on selecting the Board members for the Indo British Partnership Network, we were very clear that we wanted a variety of sectors, which I think you can see from the Board members, we have representation from the London Stock Exchange, from Virgin Atlantic, from lawyers, consultants, the brewing industry, so a variety of different sectors. From the companies, I wanted senior-level individuals who had the knowledge and expertise of doing business with India, as opposed to having a well-known chief executive, I would much rather and we decided deliberately to have people who had that in‑depth knowledge, who were genuinely passionate in their knowledge about doing business with India. For example, the Board member from KPMG actually set up KPMG in India from scratch and is now a partner over here in the UK. The Board member from Accenture, which is now one of the largest consultants employing thousands of people in India, set up Accenture in India and is now a senior member of Accenture here in the UK. It is that sort of expertise of people who have been there, who have done it, who have that in‑depth knowledge and we have got a superb Board. Our Board meetings are absolutely packed. We come out of them feeling really we have achieved a lot. They are constructive; it is not a talking shop. Q240 Chairman: To try to read between the lines of what you have said, you think that your added value, as an organisation, is that you can reach out to those small and medium-sized businesses and show them how business can be done in India, that is, talking with the benefit of experience and understanding? Mr Bilimoria: Yes. It is creating awareness for doing business in India, so we have a website that we have set up. It is an excellent website, we are still developing it, but even as it stands now it is very informative, and it is a membership organisation, this is the other aspect of the Indo British Partnership Network, and it is free to join. We wanted to keep it accessible and already we have 265 companies that have joined and within the companies quite often you have more than one individual who joins as a member, so we have approximately 400 individuals who have joined already in such a short time. Our website receives huge numbers of hits, I think that was in the submission as well, so it is getting known, and really it should be, in many ways, the first point of call for a business wanting to do business with India. They come to the Indo British Partnership website and from there they get information, they can 'phone the Secretariat and they can be pointed in the right direction and, of course, to UKTI and all the services it offers. Q241 Chairman: I have one last organisational question, my colleagues have other points on this and we will move on to the real subject of our investigation, which is actually how to do business with India. You said your budget is £70,000, £80,000 a year, with the sponsorship, which is a very small sum of money indeed, considering the scope of the market, but even that money largely will dry up in three years' time. How will you be funded after that, will you be looking for subscriptions, what will happen then? Mr Bilimoria: We would like to keep it as accessible as possible, particularly from the SMEs' point of view, to be able to join free of charge, but there are plans being considered to have a tier of members who could be members who would be sponsoring members. We are getting sponsorship already, as I said, we have obtained to the value of approximately £12,000 of sponsorship in our first year alone, for example, the guide was sponsored by Virgin Atlantic, and increasingly we will get sponsorship. We are very confident about the funding part of it. Particularly given that we are not talking about very large sums of money, I think we are punching well above our weight. Q242 Chairman: Let us move on to the bigger question of India itself. This Committee is concerned, as I said, that British business is not responding as aggressively as it should be to the opportunities in such a big and fast-growing economy, and that is one of the things which are driving this inquiry and led to you being established. Certainly it is reflected in some of the very disappointing evidence we have received from British business and representatives of British business, I think a failure to understand the challenges and opportunities that there are. Suggest to me what you think are the main opportunities for UK companies in India; do your sales pitch for me now? Mr Bilimoria: In many ways, the Indo British Partnership is the voice of the private sector, it is the private sector lead for British business with India, and what we see is that there are huge, huge, huge opportunities and we are only scratching the surface at the moment. I think British business is waking up to the opportunities, and thankfully waking up before it is too late. The opportunities are there, and when people say "In which sectors would you think there are opportunities for doing business between Britain and India?" you say, "Well, actually, yes, there are priority sectors but in just about every sector there is potential for a British business to operate." I think, playing on the strengths of Britain, our financial sectors, the London Stock Exchange, there is a perception in India very much, when it comes to education or financial markets, of thinking of the United States as the first priority. Yes, the New York Stock Exchange is by far the largest stock exchange in the world, but the London Stock Exchange is by far the most international stock exchange in the world and in many ways it would be far more appropriate for Indian companies perhaps than New York Stock Exchange would be, so it is encouraging Indian companies to list on the London Stock Exchange. India does not have the equivalent of the Alternative Investment Market; we have that expertise, the Alternative Investment Market now is widely considered as one of the leading, if not the leading, secondary markets in the world, and we have that expertise, and there is potential for an Alternative Investment Market in India, and the London Stock Exchange has that expertise to help India achieve that. It is both ways. In terms of investment in India, one of the greatest opportunities is for British companies actually to invest and operate in India, in the way that we at Cobra Beer are doing. We brew now in five countries around the world, including in the UK and in Europe, and we started brewing in India again, after a big gap, a year ago because we see the Indian market as an enormous opportunity. I think there is the whole issue of perception and reality, where the perception is that China is where the manufacturing potential is and China is where manufacturing exports are the expertise, and India has the expertise in software, in BPO, in outsourcing, in IT. Yes, of course, India has that expertise, however people overlook that India is actually a huge and growing manufacturing base in itself and has huge expertise and world-class companies, producing world-class products. For example, the second-largest producer of CDs in the world is Indian. Indian pharmaceutical companies produce world-class products. The Cobra Beer brewed in India last year was submitted to the Mons Selection World Quality Awards and won two gold medals the first time, so India is capable of world-class manufacturing. The growing middle-class, consuming class, in India, which is estimated now at up to 300 million people and growing at the population of The Netherlands every year, is a huge and growing market, and that is a huge and growing market for British companies. I think British companies need to go out there and operate over there and take advantage of this enormous opportunity, and India, of course, from its side, is very keen on foreign direct investment, so India would welcome that. It is more than increasing exports and more than increasing inward investment, it is also about investing in India and participating and partnering in India's growth. Q243 Miss Kirkbride: I have to say, it is a stunning figure that India represents such a small amount of our international trade, especially given this massive historic link that the United Kingdom has in India and our own significant population of Indian extraction. Why do you think that is; because India was closed for such a long time and that it dropped to nothing and now it is rebuilding? Why is it right down there at the bottom of the list of the people we do trade with, given that history? Mr Bilimoria: I think, firstly, it is not bottom of the list, it is £6.4 billion. Since the Indo British Partnership was launched in 1993, the trade between the two countries showed business investment, both ways, has grown by over 120 per cent; however, as I have said before, it is still scratching the surface. I think, primarily, it is a lack of awareness. For too long now, everyone has been focused on China's growth, which has been truly impressive and is continuing to grow and there have been huge opportunities in China, but people have not been as aware of the opportunities in India. Also, the Indian economic reform, the momentum was far greater in the early years and then the pace of the liberalisation reform did slow down. It is only in the last four or five years that the Indian economic reform has really taken off. Now I see in India that there is an alignment between the consumer, who has always wanted liberalisation, business, which earlier not always wanted liberalisation now wants liberalisation, and Government, regardless of which government is in power in India, wants liberalisation, so there is that alignment, which has never been there historically, and there is no turning back. I think that reform is going to continue, the pace of the reform is there, the economy is predicted to grow at eight per cent now, year on year, they are aiming for double-digit growth, and I think British business is now waking up to that, so there is a huge awareness-raising exercise that needs to be carried out. Also, if a company has never dealt with India, quite often they do not know where to start, they do not know to whom to talk, and I think there is a big role to be played by the Indo British Partnership, by UK Trade and Investment, both here and in India, to help these companies. There is a superb initiative, which has just been started by UK Trade and Investment, called the OMIS, the Overseas Market Introduction Service. It is not the old, standard, if a company wants to do business with a particular sector in India, when you are in the automotive sector and you are given just a standard 'automotive sector in India' report, which has been prepared by somebody and it is given to everyone. This is a tailor-made, bespoke service, where they will look at your individual company, your requirements and try to tailor a report that will help you as a company, going so far as introducing you to the right people in India, and that is at a nominal cost; these reports start at £400, to £800, to £1,200 each. I am sure that a lot of businesses do not know about that service, that it is available, and it needs to be marketed over here, so there is a huge marketing exercise to be done. Q244 Miss Kirkbride: One of the things that the press say is that the reason why British companies do less well abroad is because they are more risk-averse than other countries, the US particularly but other European countries. Do you think that is part of the psyche of British companies, and Shai might like to answer this, is that part of what you think is going on, as to why Britain has not been doing as well in these emerging markets? Dr Vyakarnam: If I could pick up the earlier question and roll the two together, the sectors of experience of British business in India I think come from the traditional areas of manufacture, the older industries, if you like, to what has become the new knowledge-intensive industries. It has a little bit less experience in that area between India and Britain of each other, apparently because the Indian diaspora has been going to America for the last 20-odd years, with the universities there attracting the top talent. Though there are people of Indian extraction here, they have not come from the elite institutions of India, and the numbers are quite large, something like 100,000 people of Indian and Chinese origin. For example, in Silicon Valley, a third of the start‑ups in hi-tech were described as IC start‑ups, not integrated circuits but Indian and Chinese start‑ups, so 30 or 40 per cent. You do not have those sorts of numbers in the clusters around Oxford, Cambridge and London. That is certainly one aspect. From what I have seen over the last few years, I think British business has been focused on the European Union and looking at France, Germany, Italy, and so on, closer markets, nearer markets. That is understandable; there is a lot of noise around being part of the EU. There is the Indian diaspora question, there is the European Union question, and the third part of it, for me, I think, is that British business currently is trapped a little bit in its own problems, pensions problems, companies running out of cash and it just seems more risky to fly further afield to look for new businesses, so there are other structural issues of Britain's own making which prevent the sense of adventure, if you like, which is implied in your question. It is opening up; there is a huge amount more of work to be done though, at all levels. Awareness-raising needs to be done, there are barriers of perception as well as barriers of opportunity and we ought to make the opportunities look more exciting than the barriers. Q245 Mr Hoyle: Can I take you on to trade and investment, and of course we have had witnesses already before us, we have had a pitch painted, "This is the place to be; no problem on trade and investment," yet, on the other hand, we have had other witnesses who say, "Oh, no, it really is a problem, not only is there a problem with import duties but also protracted legal cases." What is the real answer? Are you satisfied that India is fully open for business or do you think that really there are barriers there? Mr Bilimoria: The pace of reform and liberalisation is increasing significantly, and whenever we have had the opportunity to question them on this the Indian Government say quite often that they would like the reform to be even faster than it is, they would like the liberalisation to be even faster than it is. One has to take into account the practicalities of a coalition Government with 18 parties in the coalition, and of one of India's greatest strengths, its enduring democracy and a federal system with so many different States, all of which are great strengths of India, but also, in practical terms, a growth rate of about eight per cent, given that framework, I think, is superb. With the reform process the barriers continually are going down, they are decreasing all the time. However, if you look at the World Economic Forum, in their Report in 2004 of the most problematic factors for doing business in India, number one is the inadequate infrastructure, and it is a serious issue and a serious challenge. The second one is inefficient bureaucracy, and the licence raj, although it is diminishing, is still very much there; and the third is corruption. There are other barriers as well. The reality is that despite all the barriers the opportunities are there and India is well aware of these challenges, India is trying to address the challenges. Personally, I express the challenges in three tiers. The first is the ground-level work, the health, the education challenges, and the latest Budget, which has come out just today in India, again, increased spending going into health and education. The second tier is of the infrastructure. In communications, India has made huge strides in telecommunications, for example, and that is increasing really very significantly. Of course, a third tier is the free market and having a genuinely free market, and Indian tariffs are still relatively high. We are not talking about extreme items, like Scotch whisky, where the import duties are between 400 to 500 per cent, but, on the whole, tariffs have been coming down, generally speaking, but still need to go down much further. In India, in terms of being a genuinely free market, it still has a long way to go compared with, say, a country like ours, which I believe is one of the freest markets in the world and is one of Britain's greatest strengths. Q246 Mr Hoyle: Are there any barriers which affect UK investment, in particular, that there is a disadvantage to the UK investors compared with, say, Indian investors in their own companies, or non-Indian companies? Are there any trade barriers which differ from country to country? Mr Bilimoria: We never look upon it that there is any difference between the UK and any other country. Yes, quite often, within India, it is a different matter, when you talk about Indian companies within India, and of course you have got all the investment limits in so many sectors as well, that really is a barrier to investment, in the insurance sector, for example, in banking. In my own industry, to get the Foreign Investment Promotion Board (FIPB) clearance to invest in India it took us three years, but, on the other hand, in the Cabinet meeting in January, they have just freed it up, completely. It took us three years but, ironically, actually it was freed up for everyone, so steps are being taken, areas are being freed up, one by one. Q247 Mr Hoyle: Besides being a pathfinder for the companies, and obviously three years of pressure and they all ought to thank you afterwards, are there any areas within India, businesses that the Government say are taboo, "We will not allow any foreign investment to come in; these are protected"? If so, what are they: could it be energy? Dr Vyakarnam: I think there are limits to energy and some limits to the pharmaceuticals, some limits to retailing, I think. Q248 Mr Hoyle: Can I get it right: pharmaceuticals, retailing, energy? Dr Vyakarnam: The pharmaceutical area sets the pricing, because the Indian Government wishes to regulate pricing on pharmaceuticals, which makes it a little bit less attractive for Indian companies to invest in R&D, for instance, price caps in certain areas of drugs, and so forth, because it has a huge impact on a very large population of poor people. The retail sector, although it is freeing up with certain brand names in the cities, large-scale retailing would affect, again, a large proportion of poor people, and micro-retailing which takes place, from hand-carts, and so forth, so there are worries about that. Again, as Karan Bilimoria said, there are coalition parties in place, so it is domestic politics being balanced against free trade agendas. I think, on the whole, it is moving forward. Q249 Mr Hoyle: It is not open to Tesco yet? Dr Vyakarnam: Not yet. Mr Bilimoria: Single-brand retailing has just been opened up, and it has only just been announced that 51 per cent ownership can take place in single-brand retailing, so it is only a matter of time, in my personal view, before retailing as such opens up in India. Another area, for example, legal services, at the moment foreign law firms are not allowed to practise in India. That is something we have been talking to the Indian Government about, saying very seriously that the perceived concern in India is that the advocates, the Indian Bar Association, are concerned about British barristers possibly practising in Indian courts, whereas actually what we are looking for, from Britain's point of view, is to allow advisory work from lawyers, mergers and acquisitions work, business advice work, corporate finance work, which would help Indian companies, particularly as Indian companies increasingly are getting more global. It is to Indian companies' advantage to have the expertise of foreign law firms there, and of course possibly one would have an agreement where it was said that barristers would not practise in Indian courts. The advocacy can stay in India; it is the advisory work that will be beneficial to both countries. There is a dialogue going on, and again this is the benefit of the private sector and the Government working together, because we have working groups within JETCO which address these issues, address the barriers. I think JETCO is a very good initiative in addressing the barriers, once a year in a formal meeting, where the Government and the private sector sit together round the table, put the barriers and challenges on the table and have an action plan. That is followed up by Indo British Partnership Network meetings; at every single meeting we touch on the JETCO action points and we touch on the working groups, and most of the working groups actually are members, are from the Indo British Partnership Network. Q250 Mr Hoyle: Maybe we have just found out part of the reason why we are not seeing a lot of UK investment out there. I think the worry is that, what are our strengths - legal, retailing, energy, pharmaceuticals, in which we are the leader - the reason we are not doing very well is because actually you have got barriers to what we are good at in the UK. Maybe that is part of the problem; maybe we have got to see it coming a lot quicker if really we are going to increase trade, because it is where all the expertise is that you are blocking us? Mr Bilimoria: Actually there are so many areas that are open and that are relatively open. Even in energy, there is a huge requirement for energy capacity to increase in India and British firms can play a part there. On the other hand, we have also got to be proactive and we have got to compete. Where the airports are concerned, there are two airports recently that have been put out to tender; sadly, British companies are not winners of those, as things stand. Q251 Mr Hoyle: I think we are missing something. You have got many things that we can tender for; you may be buying cars but the UK is not exactly the world leader any more. Where I think we are the best in the world is in legal services, pharmaceuticals, retailing; whatever people's views might be of Tesco they are a brand leader throughout the world. All I am saying is that we cannot penetrate the areas we are good at because there are still barriers there. What we need to see is those barriers removed to increase the UK presence in India? Dr Vyakarnam: I think there is another view on this. One of the JETCO delegations is a hi‑tech JETCO delegation, and there is a great deal of potential on both sides for a rethinking of this in terms of co‑development. India is growing its knowledge base enormously in the university sector, it is growing its R&D base, the Council for Scientific and Industrial Research has something like 26 major laboratories in India, it is committed to science to go. I hope you get to visit it. The head of that is Dr Mashelkar FRS, so strong links with the UK. They are moving forward at a tremendous pace. The UK has a good innovation knowledge base in the Russell Group of universities and the innovation with industry is not that great. It has got a great demand for ICT, the biotech sectors, and there are absolutely no barriers whatsoever in that environment, either from India or even from the UK itself. There are certain sectors in which there is a little bit of a case where Britain should steer from the foot with the European Union on its tail, things like the European Space Agency taking the decision, for example, that all European satellites will launch on European rockets, and therefore preventing our British small businesses getting in there, the satellite industry growing and taking advantage of the cost base. There are other forms of biotechnology research that could be done on a co‑development basis between the UK and India, so I think there are other possibilities. We should not get caught up in just four or five anecdotes as examples of where there are barriers. Mr Bilimoria: We are: our expertise in telecoms, Vodafone has invested in Bharti telecom and Airtel in India. This is the whole thing, these barriers are there but in spite of these barriers there are tremendous opportunities, and these barriers are coming down all the time and I can give you several examples of this. Q252 Mr Hoyle: I think we can both agree that the quicker the barriers are removed the quicker the investment can come? Mr Bilimoria: Certainly it would help the investment to flood in. For example, if India became a completely free market tomorrow, it would make a significant difference. Chairman: Dr Vyakarnam's answer happily leads us to Peter Bone's question. Q253 Mr Bone: Indeed, and I wish, many years ago, when I was in manufacturing, your organisation was in existence because, being a medium-sized company, it would have been extremely useful to us. You were talking about the European Union and effectively trade barriers, you were talking about India having high tariffs, but equally when we talk to the Indian Government they say, "Hang on a minute, the reason we have got that is because the European Union has not been playing ball with us and why should we open up our markets if the EU won't open theirs up?" I have a lot of sympathy with that point of view. I just wonder whether, in fact, we are being held back, when we talk about Indian and British trade, by the fact that the EU is doing what it is doing? Mr Bilimoria: In the WTO talks, one of the greatest challenges is agriculture, and on that score I know that, from Britain's point of view, our view is as a country that we want to be completely open, we want there to be a level playing-field, but I perceive that they are restricted from the European Union. However, what I say continually is that, whatever the issues with agriculture, yes, it is a bargaining position where the WTO talks are concerned, and, yes, it is something that I feel is completely unjust and unfair. However, that should not hold up the opening up of and the tremendous potential in goods and services and manufacturing and investment both ways. I think the encouraging thing is that, regardless of agriculture, progress is being made in these areas. Q254 Mr Bone: I think that is true. If you woke up in business one day and there was not a barrier or a problem you would think something was wrong, because there always are, but how could the British and Indian Governments move the situation forward so that perhaps the investment between the two countries could be improved? If you had the opportunity, what would be the one thing you would like to see them do? Dr Vyakarnam: If there were a silver bullet, I guess it would be for Britain to leave the EU. Q255 Mr Bone: I think we have very good witnesses today, Mr Chairman. Dr Vyakarnam: That is a personal view, but there is no silver bullet, we have to work within the framework of multilateral discussions. What I sense is that both Kamal Nath and the ministers here, Johnson and Ian Pearson, are working hard trying to get the dialogue going and open up, looking at the note in the Doha Agreement, and so on, and it is clear that everybody has to try to work within the framework of the WTO as best we can. There is another layer of the European Union, so I do not believe in silver bullets necessarily. Mr Bilimoria: One of Britain's greatest strengths is that we are an open economy, we are a free market and I think that is why, to this day, we attract huge amounts of foreign investment. Quite often we are the gateway to Europe for many countries. I think my dream scenario is that India becomes a completely free and open market, and it is moving in that direction, it has a long way to go but that would be my dream scenario. Q256 Chairman: If the French and the Luxembourg Governments spend the whole time telling Mr Mittal that his investment is not wanted and that we will be protectionist, if you like, to keep India out of the European Union, what kind of message does that send back to the Indian business people who are being told by their own Government that they must liberalise? Dr Vyakarnam: It does not help. Mr Bilimoria: I think, where Britain is concerned, we have not been sending out those sorts of messages and I think as long as Britain continues to maintain its open stance, if I may move that on to a point that I would like to emphasise. There is a huge exercise here in Britain to raise the awareness with British business, particularly SMEs, of doing business with India and in India. There is also a huge exercise to be done within India of raising the awareness within Indian business to do business in and with Britain. There are lots of perception issues. There is this whole perception of reality issue in India as well which is being addressed through the public diplomacy campaign, which has been explained to you earlier on, where we are promoting Britain in India, not just in business but in culture and education and science and technology, and I think that is a very important exercise. To that extent, there is not a mirror of the Indo British Partnership Network in India. UK Trade and Investment have their commercial officers placed within Deputy High Commissions and the High Commission in Delhi, but there is not a Network, there is not a membership organisation for Indian businesses to join, the equivalent of the IBPN, focused on doing business with Britain in India, and I think there is potential to organise that sort of organisation. Chairman: Roger Berry and I were in Belfast yesterday seeing a major investment in call centres in Northern Ireland, which is counterintuitive, to say the least, and very successful, by HCL. Q257 Roger Berry: You have referred to the fact that there are opportunities as well as barriers, but obviously, in some sense, some of the barriers represent opportunities for British investment. The infrastructure, as you rightly said, is the number one problem, certainly as the World Economic Forum identifies it, but presumably that would represent an enormous opportunity for UK companies: are they rising to the challenge? Dr Vyakarnam: I think it is beginning. The signs are there and I think it could be strengthened, is the impression I have. I had an architect on a visit recently to Calcutta who won some work with a company there called (Pantalone ?) to redo a huge shopping complex, and so on, and really the sensitivities of the architecture, the heritage of Calcutta, or Kolkata, and these are happening. I can think of one or two other major expansion plans, Arup, I think, at Hyderabad Airport. Mr Bilimoria: This is where the Indo British Partnership Network is already making a difference. For example, the business delegation which accompanied Ian Pearson, the British Minister for Trade, in January to India was made up of predominantly Board members of the Indo British Partnership Network and from all accounts was a highly successful trade mission, we have had excellent feedback all round. One of the great accomplishments of this mission was that one of Britain's best-known architects of shopping centres and malls, who designed Bluewater and the Bull Ring in Birmingham, both hugely successful, won two major contracts, for the largest shopping mall, I think, to be built in India, in Mumbai, and also a shopping mall in Calcutta. There are a number of ways in which the IBPN private sector can make a difference. Q258 Roger Berry: Given that the UK does have major construction companies, and you have mentioned the issue about the new airports, there is a question of docks, there is a question of buildings, the whole infrastructure, the whole construction industry, given that the UK has some international companies of great repute, is the problem that they are putting in bids for work in India, the airport example you gave, I think, and just not being competitive enough, or is it that they are not putting enough work in that direction and they are not bidding for contracts in India sufficiently vigorously? Mr Bilimoria: There are examples of huge success that have taken place as well. One example that we saw on the ground last year was P&O and the port that they set up, a container terminal, in India, which was set up in five years from scratch. With all the bureaucracy barriers, with all of the infrastructure barriers, they set themselves a target of achieving the maximum capacity of 600,000 containers a year. Within five years, when we visited them last year, they were at 1.3 million, they had more than doubled their final capacity they were hoping ever to reach within five years, and that was with rail infrastructure barriers, depth infrastructure barriers in the harbour, access to the terminal infrastructure barriers, despite all that they were achieving double their final target. This is the whole aspect of India, this is the message that needs to get across to British companies, that, yes, the barriers are there, yes, they are coming down, but, yes, the opportunities are there. Q259 Rob Marris: You talked about the delegation led by Ian Pearson, which, broadly, but not wholly, I am sure, comprised Board members from the IBPN. Looking at your list of Board members, I do not know all the organisations on there but I am familiar with some of them and some of their names look to be fairly self-explanatory, but there do not appear to be any major transport companies or construction companies or manufacturing companies. If that is the case, it seems to me there is an imbalance in your Board, in terms of what you were just talking about to Roger Berry. Is that something that you need to address or am I misunderstanding what you are doing? Mr Bilimoria: We would welcome people from a variety of different sectors but have put a limit at this stage on the number of Board members to make our meetings effective and also to have strong participation, and we do have excellent participation at our meetings. Yes, as time moves on, we will bring in people from other sectors, but there is no deliberate exclusion of any sector at all. I think we do have a wide variety there of sectors and expertise but certainly we are open to taking on more in the future. Q260 Rob Marris: Apart from you, it does look fairly service industry to me; there is nothing wrong with the service industry but that is only one part of the equation, is it not, with Marks & Spencer as retail, for example? That is why I am probing you about what appears to be an imbalance. Mr Bilimoria: There are other manufacturers there as well on the list; of course, we have the CBI represented at the table as well, who represent several British manufacturers. Q261 Mr Binley: I want to talk about imbalance too, but I am interested particularly in what I see as the imbalance in investment between the two countries and the profitability of that investment and where it is reinvested. I believe we have got a sizeable imbalance there, a net deficit, from the UK's point of view, with quite a lot of profit made in the UK going back to India and not being reinvested here. Can you tell me how your organisation might help to rebalance that imbalance? Dr Vyakarnam: I think all businesses, anywhere in the world, would want to take some part of its profit back to its founding business, I would imagine. Presumably, that is what you are referring to, the repatriation of profits. Q262 Mr Binley: In terms of FDI, there is a net imbalance, in terms of investment, in those terms, because most of the profit made by Indian companies from investment in the UK goes back to India. If you added SMEs to that, that figure would be sizeably increased, actually. I just wonder what you could do to ensure that there was further investment by Indian companies in the UK to redress that balance? Mr Bilimoria: My view is that we have got to continue, in Britain, being a completely open economy, and that means open to investment from anywhere, any country. As long as they are bringing investment into Britain they are creating employment over here, they are creating opportunities over here and we have unrestricted money flows going out of Britain. That free market is one of our greatest strengths, that is what makes the City of London such a phenomenally successful place and one of the best places in the world to have business headquarters. If we can encourage Indian companies, which increasingly are going global, at the moment there are no truly giant global Indian companies, soon there will be, and Tata will be a giant global company soon, I am sure, but in the scale of the giant global companies the Indian companies are emerging and within the next ten years there will be giant global Indian companies. In the same way as, for example, South African Breweries moved their global business headquarters to London and took a London listing on the London Stock Exchange and then, in five years, from being the biggest brewery in Africa and South Africa, today they are the second-largest brewer in the world, headquartered in London, listed on the London Stock Exchange, I would hope that, in the future, there will be several Indian companies which use London more and more as their global base and that can be only a good thing for Britain. Q263 Mr Binley: We are seeing already an imbalance internationally, in terms of people investing in this country and our investments abroad, and that is raising some concern. I just wonder whether the area we are talking about would not help in that respect and keep that concept of freedom alive over the coming 40 or 50 years, because my concern is that there could well be a move to protectionism in this respect and that would be harmful to all that you wanted to do? Dr Vyakarnam: I would like to check the figures at some stage, but I believe that FDI from India into the UK exceeds - - - Q264 Mr Binley: I can tell you: it is minus £18 million without SMEs, which is about seven per cent in-going. Dr Vyakarnam: The investment coming in here presumably is creating jobs, paying taxes, and you see that as part of investment. The repatriation of profits I think is a normal matter for both countries. Mr Binley: Reinvestment? Q265 Chairman: The suggestion is that the worry we have is that when Britons invest in India they tend to reinvest their profits and grow the business, but the figures suggest that Indian investment here is treated as a cash-cow and the money is sent home, and there seems to be a different approach; that is what the figures seem to indicate. Is that a fair analysis? Mr Bilimoria: For example, Tata bought Tetley in 2000, and to my knowledge both profits and market share have increased. To me, the priority is Britain being an open market and welcoming in investment, and if there is repatriation of profits, well, British companies would want to repatriate profits when investing in India, should we wish to do so. Of course there will be an element of reinvestment. If an Indian market is growing, in my case we predict that if the beer market in India follows China it will grow by between 25 to 30 times in the next 25 years, in which case, we will be reinvesting all the time in a growing market. Q266 Mr Binley: Exactly the point I am making, because if you are looking at China and India having 60 per cent of global trade by 2050 then the problems that creates for our home market-place, with unemployment, and so forth, are sizeable and considerable. That is why we need a little bit more understanding and respect, would you not agree? Mr Bilimoria: In terms of looking ahead, the point that you have made, another advantage that we have is that, as Chairman of the Indo British Partnership Network, I am also a member of the Asia Task Force, also a member of the UK-India Round Table, both of which are forward-looking and looking at the challenges and the opportunities in both countries, looking ahead, preparing reports, forecasts of where India and Britain will be in 2020, for example. Also, we are linked into the London-Delhi Round Table that meets over here and I am linked into the Asian Business Association over here; so we are aware of this forward-looking approach. Q267 Mr Binley: You are a very high-profile guy, with all those connections; you are going to take this on board and see what you might be able to do about it? Mr Bilimoria: Certainly we will look at it. Mr Binley: I am delighted. Thank you. Q268 Mr Weir: We heard in evidence that Tata Consultancy Services is to invest in a joint venture with the Pearl Group in Peterborough. I just wonder, do you see this type of model of co‑operation in this joint venture as the future for investment by Indian companies in the UK? Dr Vyakarnam: I think, for the larger companies, it is a way forward, yes, in particular sectors. I would imagine that for ICT, hi-tech and the biotech industries it would be a good model, where collaborations, joint ventures, and are so on, are pretty normal practice among large companies on a global basis. Mr Bilimoria: There are other examples. Mahindra and Mahindra have bought Stokes. Tata, of course, are hoping to set up a (baco ?) manufacturing plant. Bharat Forge, one of the largest in its sector in the world, has bought a Scottish business. There is a lot of activity and there is a lot of investment coming from India, a lot of it to date has been in the IT sector but now it is in manufacturing as well, which I think is good. Q269 Mr Weir: Do those tend to set up joint ventures when they go into manufacturing as well? What I am getting at is, the investment is coming in, is the future going to be joint ventures with UK-based companies or are Indian companies going to set up their own, from scratch, if you like, investment in the UK? Mr Bilimoria: My experience is, I have seen a variety, I have seen acquisitions, I have seen joint ventures. I have seen one Indian company which is part-manufacturing some of the product, some of which was imported from Europe into India, sending it to the UK to be finished, so using the UK not only to finish the product but also using the UK as a sales and marketing centre for that product worldwide, particularly into Europe. There is a variety of ways in which this can happen. Q270 Mr Weir: What about the reverse, for UK companies wanting to invest in India; is joint venture the way forward for them, rather than trying to break the Indian market, if you like, on their own? Mr Bilimoria: I think one has got to keep an open mind. There are ways of going in, of a greenfield site, of licensing, of joint venturing, of acquiring, and I think one has got to keep all of the opportunities open. Q271 Mrs Curtis-Thomas: My question relates to information deficit. We have already taken quite a lot of evidence, particularly from the UKTI, about information deficit in the UK, and would you identify this as a major or a minor or significant factor in UK-India trade and what steps have you taken to address this issue? Dr Vyakarnam: I think there is an information deficit and the issue of perceptions, therefore, looms large, and sometimes is driven by the press's perception of what they think are the realities, and so you get from lack of information to misinformation on some occasions about the substantive issues. There is information at a number of different levels that is required. There is a sort of general awareness of the possibilities, of the opportunities and the realities, and so forth, and then there is the harder information that is required on the ground, sort of the staff at the Business Links, working with the small businesses, actually the hand-holding services, taking advantage of UKTI's OMIS, to which Mr Bilimoria referred earlier. At that level too work needs to be done to scale up the operation, to scale up the take‑up of opportunity that exists. There is an information deficit at a number of different levels, for sure. Q272 Mrs Curtis-Thomas: One of the things I find immensely interesting is the number of different websites that are available, providing different bits of information. I logged on and said "Do business in India." I do not know what sorts of word plans you put in which acknowledge the fact that somebody literally can offer standing-start, but the responses were very different and not what I was looking for. Are you happy with the way that the web presents opportunities in India and do you sense that you have a role, or rather a sort of co‑ordinating role, to bring to that, and, if it is not you, who should be doing that? Mr Bilimoria: I think that this is one of the practical ways in which the Indo British Partnership Network has found, already in its early days, that it is becoming a first stop portal, gateway, to doing business with India. From there we are linked into a variety of organisations, of course UKTI but also to the Indian High Commission and to the Indian Government departments and to the British High Commission in India and to various other organisations and sector expertise. If there is this one-stop shop from which you can be directed, that role is starting to emerge already and we are getting huge numbers of hits on our website, in the very early days, without having millions of pounds worth of marketing budget to make people aware of the Indo British Partnership Network. Dr Vyakarnam: Personally I got interested in that question and registered a website called 'thinkindia.co.uk' done on a bootstrapping basis and a couple of students, and so forth, and we have got a portal for news and information which is linked into the IBPN website and we are trying to promote that and it is a long slog. I think there is a role to be played by the Indian High Commission here as well, because it is not just Britain's job to promote trade with India, I think, also, equally, it is Indian Government's role to promote. I think, to some extent, the communication gap is that sometimes Indian business, and sometimes Indian Government, does not present its own PR effectively enough to the British public. Q273 Mrs Curtis-Thomas: My observation is, you may be getting a significant number of hits, but whether or not you have got an effective website is another matter entirely. If you start afresh, you are presuming that the effectiveness of each contact has a summation which leads the individual to making investment in India and I do not see that happening, because I think you will run into brick walls, actually. Website direction is one thing; hyperlinking to sites, unless it is a fruitful event, then it is not going to lead you to where you want to go, which is investment? Mr Bilimoria: Part of our plan, in building the website, is to make it more and more proactive. Because people join on a sector basis, when they join they declare which sector their expertise is in or their business is in, then every time there is a sector report produced or there is a delegation which is of interest to that particular individual, or that sector, we can notify them of it proactively. The more proactive we can be and develop the site to be then we are going to be more and more a catalyst to encourage this trade and business investment. Q274 Rob Marris: One of the things which will help UK companies investing in India, of course, is local knowledge, and one of the ways to acquire that is through partnership working. UK companies also have, or should have, a corporate social responsibility agenda, and I would hope that Cobra Beer does as well. A particular problem in India, which by and large is not existing in the UK, except to a very small extent, is casteism. What is the IBPN doing to educate its members who are investing in India to take the issue of casteism, and the issue of Dalit in particular, seriously so that the abhorrent discrimination which exists currently in India, and in other countries, on the basis of caste is not bought into by UK companies investing in India? In fact, that they oppose it, in line with the Constitution of India, written by Dr Ambedkar, with whom you will be familiar, and there are now the Ambedkar Principles produced by the Dalit Solidarity Network? What are you doing about that, in your own company and in IBPN? Dr Vyakarnam: It is an interesting question about what the role of IBPN would be with injustices in other parts of the world; this is quite a curious question, actually. I will let Karan answer for Cobra Beer, but as far as IBPN is concerned it has been in existence for about a year now, the Board composition. I think you make an extremely useful contribution and I think it should be raised at the next Board meeting as an issue for companies, members of IBPN, to take to their own businesses, but I do not know that, as a Board member of IBPN, I would wish to dictate other companies' policies. Q275 Rob Marris: What I am asking is whether you are encouraging your members to comply with the Constitution of India, which sadly is often overlooked within India in this respect, whether you are actively encouraging them to do so, as I think you should be? Mr Bilimoria: I think the Indian Government, for years now, has gone and is going to great, great lengths to eradicate all discrimination, of any sort. If what you are suggesting is that we should make our members even more aware of this then certainly we will make them even more aware of it. It is something that the Government has been very, very active in promoting and is promoting strongly in the whole of Indian society. Q276 Rob Marris: You manufacture in India, do you not, or have I misunderstood that, with Cobra Beer? Mr Bilimoria: Yes. Q277 Rob Marris: Do you monitor the proportion of your workforce which is Dalit? Mr Bilimoria: We have a licensing agreement with a brewery over there, and where corporate social responsibility is concerned, where the environment is concerned, we monitor that very carefully. I can give you one small example where the brewery is located in an agricultural area, surrounded by fields, and the brewery started buying the husk from the mustard harvest to use to generate power for the brewery, so actually using a natural source and providing extra income for the farmers. The effluent from the brewery is treated and then is used by the local farmers as extra water and irrigation; so we are very aware of corporate social responsibility, and personally I always encourage it at every opportunity I get. Q278 Rob Marris: Could you let us have a note perhaps on the proportion of Dalit that you employ, or the brewery employs? Mr Bilimoria: I could ask them. Rob Marris: Thank you. Q279 Chairman: The questions that Rob has been asking do highlight one interesting question, which is how different is India from the commercial environment of Europe or the United States of America? We have heard conflicting evidence on that. One said that actually it is not that different and, viewed from India, doing business in the UK looks pretty difficult. You only have to try putting up a garden shed in your back garden to know how difficult it is to get anything done in the UK. How different is India and how difficult is it? You have got experience of doing business in both countries; is it more difficult, or is it just different? Is it different or difficult? Mr Bilimoria: In many ways, it is very similar. For example, the basic business environment is similar, the legal system is very similar, and actually India has a very good rule of law. Yes, there are issues sometimes of the time it takes for the legal process to take place, but the basic law actually is very good, even when it comes to intellectual property, which perception-wise seems to be a concern. There is actually very good intellectual property law in India; yes, enforcement and the time it takes can be an issue. There is a free press in India, and a very vibrant press; there are more television news channels in India, I think, than in any other country in the world, and the most important thing is that it is a free press. In many ways, the business environment is similar, the financial markets are very similar, the stock exchanges. On the other hand, it does help to have local knowledge, local expertise and that is where it helps to have good advisers, and that is where UKTI, the British High Commission in India, on the ground, with its locally-employed staff, can be of great benefit to British businesses, particularly when they are operating in India for the first time, to point them in the right direction and guide them in the initial days. Then I think very quickly companies find their feet and find it a good country to operate in, from a business point of view. Q280 Mr Wright: I am genuinely surprised really at the low level of trade with India that we have in the UK, representing just one per cent of the total trade. We have been told anecdotally that one of the reasons for this low level of trade with India is that, unlike the Indian Chambers of Commerce, the UK Chambers of Commerce do not have any dedicated offices in India. Do you think that this is true and, if so, do you also consider that this is a hindrance to increased trade? Mr Bilimoria: I spoke earlier of the fact that really it would help to have a mirror of the Indo British Partnership Network set up in India, and I think that is something we are trying to encourage to take place. It would help; for example, the CBI have opened up an office in China, I think it would be good if they opened up an office in India. I believe the Lord Mayor, on his visit to India, is going to announce the City of London opening up an office in India. I think that is excellent news. In terms of the actual Chamber of Commerce model, UKTI fulfils a lot of the roles of a Chamber of Commerce already. Q281 Mr Wright: Do you have discussions with the Chambers of Commerce within the UK? Mr Bilimoria: Yes. I have had a meeting with the Indian High Commissioner and the Head of the British Chambers of Commerce to see how we can take things even further with the Indo British Partnership Network and the British Chambers of Commerce. Q282 Mr Wright: Have there been any outward missions from the UK with the Chambers, just from the regions rather than from the centre; you mentioned the Lord Mayor going from London? Mr Bilimoria: Yes. The London Chamber of Commerce has sent delegations to India and passes delegations to India, for example. Q283 Mr Wright: What about the regions' Chambers; we are talking about the financial institutions, as far as those based in London are concerned, and that seems to be the centre, but there are other Chambers, regionally, around the UK, which probably could benefit from some of this expertise? Mr Bilimoria: The regions are sending delegations. For example, one of our Board members, Sandra Brusby, from the North West, took an all-women business delegation to India recently from the North West, so there are delegations going regularly. Dr Vyakarnam: I am sure I ran into somebody from a Chamber of Commerce in the West Midlands at the Auto Exhibition in Delhi, during our visit, and he had actually used his own credit card to fund some of his members to go and was hopeful that one day it would come back to him. Q284 Mr Wright: Really it would be true to say that you are actively supporting and encouraging Chambers of Commerce and other industries to go over there, through the UK? Mr Bilimoria: Yes, very much so. However, I feel that a lot more resource needs to be put in, both here and in India, to encourage the bilateral trade, business and investment, far, far more. I have expressed to you the small budget that we have and what we are achieving with such a tiny budget, but much, much more needs to be done. I gave the example of UKTI in our particular area, their resources have been cut from 36 people to six people in the South Asia Department, while India is booming, and I think this needs to be addressed. The private sector, once it is given a chance, we get on with it, and we can help as much as we can, but I think the Government also can do a great deal to support this bilateral trade, business and investment. Chairman: I want to change direction a little bit now, in our questioning, to what is a very important area, particularly in response to some of the comments you made earlier, Dr Vyakarnam. Q285 Roger Berry: You mentioned the attractiveness of US academic institutions to students from India and then the subsequent benefits in terms of economic links, trade and investment, and so on. I suppose the first obvious question is what can the UK Government do to make UK academic institutions more attractive to Indian students? Dr Vyakarnam: I think there are several layers to this. One of them would be the visa rules and the costs of visas and the whole process of getting people through that operation. There are possibilities to enable Indian students that are here either to get more bursaries or some way of subsidising the cost of their education. I would target those on the high end institutions, research-oriented institutions, like the Russell Group, and then allowing the students to stay long enough to gain some experience of the way that British business is conducted and maybe to recover some of the costs of their university education and then probably become partly global citizens, go back to India and take a longer view on that. Certainly there is work to be done in those three or four areas. Q286 Roger Berry: Is it the case that, the US, and presumably, I believe, other countries, like Australia, for example, in terms of fees, visa arrangements, and so on, these are the significant factors which make the States or Australia more attractive, and if we address those would that be sufficient to attract more students? Dr Vyakarnam: I think Britain also needs to regain its profile in India as the place to go to, and it is not seen as attractive to come here, compared with the USA, for instance, and some of the big-name institutions. I heard recently, I think through you, Karan, that Harvard Business School are opening a research office in Bombay, for instance. I am not aware that any British university is doing anything similar. Mr Bilimoria: I am attending the launch of that next month, in India. Dr Vyakarnam: Being at Cambridge, I am aware that the University is very interested. I looked up the numbers and they are tiny, there are 128 students at Cambridge whose normal country of residence is India, 40 undergraduates and 80 post-graduates. India is in fourth place behind China, Singapore and Malaysia for those numbers, far exceeding Germany and France, it has to be said, which were at eight and seven last year, at Cambridge. These numbers are tiny. I believe the number has grown, the total of Indian students in the UK has grown - and I would like to have this confirmed at some stage - to about 18,000 from about 3,000 a few years ago, so it is heading in the right direction. The concern for Britain has to be where these students go, which type of institution they go to and how long and sustainable these links are for future trade and what sorts of courses they are on, so we need some more data on that. Q287 Roger Berry: I am genuinely shocked by the numbers you have given of students of Indian origin at Cambridge. Dr Vyakarnam: It is very tiny. Q288 Roger Berry: It is very tiny indeed. What is IBPN doing to encourage Indian students to study in the UK, given the implications for subsequent business? Dr Vyakarnam: I think the start of it is possibly having me on the Board as opposed to having a manufacturer on the Board, so I am happy to step down if they need somebody else instead. I have been on two visits to India now, once as part of a JETCO mission, the report of which is published, so if this Committee would like copies of that I am sure UKTI can supply it. Q289 Chairman: Yes; thank you. Dr Vyakarnam: I went on the ministerial delegation as well, trying really to focus in on the high technology and linking that with the university sector and linking that with entrepreneurship, which is my area of work. I think what we have discovered is that, while India has got a knowledge base in the laboratories, while it has got entrepreneurs, the types of entrepreneurs that you find in India do not have the experience of disruptive technology type of entrepreneurship that you find in Cambridge, Oxford, London and other places and I think there is a role for the linkages to be strengthened in those sorts of areas. More broadly, encouraging more students, post-graduate students and even undergraduate students, into these universities is a very important part of what should be happening. I do not know if it is part of what the Prime Minister's initiative is going to focus on, the £10 million that has been allocated, but those are small sums of money for the long-term benefits that Britain is looking for really in the links. Mr Bilimoria: Just one thing to add there is that the growth is there, the number of Indian students coming to UK universities is growing by 14 per cent, year on year; as Shai said, the latest figure is close to 18,000, for 2004-05 it was 16,727. What is happening also is that British universities are starting to get more proactive, to the extent of opening up offices in India to recruit Indian students. I am Chancellor of Thames Valley University and we have opened up an office in India recently. It goes further, in the British universities also linking up with Indian educational establishments, so, for example, the London School of Tourism, Hospitality and Leisure within Thames Valley University has got a link‑up and an arrangement with catering colleges in India. There is a lot of scope to further the integration, and again that is one of Britain's greatest strengths. Yes, the United States is perceived to be ahead of us, but I think British universities, given our endowments, even at Cambridge, I think are a quarter of Harvard University's, if I am not mistaken. Dr Vyakarnam: They are tiny. Mr Bilimoria: We punch above our weight, as British universities, and have got respect around the world and have several world-class universities, particularly in the area of science and technology. To this day British universities are considered some of the best in the world, so I think we do have a lot to offer. Dr Vyakarnam: I think any message that can be sent out to encourage that would be very positive. Q290 Chairman: Lord Patten is actually in India at present, from Oxford, is he not? Dr Vyakarnam: Yes, he is. Chairman: We will be going to India at the end of the week and we might even run into him, who knows. Mrs Curtis-Thomas: Education is a significant sector within the UK and it is a very broad sector, taking in vocational as well as academic provision in HE. You have talked about the Russell Group of universities, you have talked about promoting those, but I would be far more interested in seeing something on the website which actually defined what the FE provision looks like within the UK, how that is sectored, because a research assessment exercise would allow you to identify universities and specific departments within universities with outstanding expertise. I would have thought that those universities would very much like to engage in a different market-place, not necessarily to have students come here but at least to provide courses in India which could be accredited by British universities. Have you thought about doing that? Q291 Chairman: Can I ask a supplementary to Claire's supplementary. How much is that the job of the British Council rather than yourselves? Mr Bilimoria: Where education is concerned, it is the British Council's domain, but we are very, very keen that it should be integrated. There is an interest from our point of view. Some of this is happening already; for example, City and Guilds, through the Confederation of Indian Industry, are going to be carrying out courses for huge numbers of employees in Indian companies throughout industry in India. You are absolutely right, there is a lot of scope, some of it is happening already, but there is scope to do far more and we are in regular dialogue with the British Council about this. Q292 Mrs Curtis-Thomas: Are you getting your education message across to your fellow Board members? Dr Vyakarnam: Yes, they are very supportive. There is a concept paper I have put in to the Board and that has gone through the Board, now it is chugging along through various other departments and we are trying to secure the resources to make the link between hi-tech, university-type linkages with the entrepreneurship connection. I think there is a lot more that can be done; it is a major area of opportunity. I think your suggestion of adding the university linkages to the IBPN website is a very good one and I shall take that back to the Board. Mrs Curtis-Thomas: Thank you. Q293 Miss Kirkbride: I wonder, do you know what the student fee ratio is, if you are an Indian student, how much less do you pay if you are an EU student, and the fact that you are getting more people coming as post-grads, because there is some financial support for post‑grads, what is the fee ratio there? Dr Vyakarnam: I think it is a very good question. I was at a function on Friday evening with the Indian High Commissioner and he was saying, at a public meeting, that he thought the Indian students were subsidising the EU students. Q294 Mrs Curtis-Thomas: They are; that is the truth of it. Dr Vyakarnam: In spite of the fee rates being what they are, student numbers are growing coming to the UK, and that is an interesting message in itself really. Certainly, there is very much a full-fee-paying approach. Q295 Miss Kirkbride: What do they pay, off the top of your head, for a course? Dr Vyakarnam: They pay full fees, whatever the institutional rates are for given courses, relative to the domestic fee rates that the EU students pay. Q296 Rob Marris: Nine thousand pounds? Dr Vyakarnam: It depends on the courses but, yes, around, say, £9,000, compared with EU students. Chairman: The principle is well made and it was a helpful observation. Mr Hoyle: What is interesting is what has been pointed out about the lack of use of UK universities. How many actually are Chevening students, UK-sponsored students from India coming to English universities, from India? I presume we have got some; every country in the world we have a link with, and such an important trading country, I just wonder how many we are sponsoring? Q297 Chairman: We will be meeting the British Council. Dr Vyakarnam: The numbers are small. I could not get into the detail, but I think you are meeting the British Council. The other people I would recommend would be the Universities UK Group. Mr Hoyle: Which now is a DTI-sponsored scheme; in fairness, it is not the universities, it is actually the UK Government giving money to the DTI and the DTI through the UK presence in India, which usually is the High Commissioner, and the best of students usually apply. This sets up a good trade basis and this should have been going on for years. I am very concerned that you have not got links. Q298 Chairman: I agree with what Lindsay Hoyle was saying. A lot of our discussion this morning is about problems in India, liberalisation and the issues over there and Dalits, and so on, and we have not spent much time looking at the issues, that actually there are barriers here in the UK, which could help develop our trade, and to me it seems this is an absolutely central issue. We have heard of very ambitious targets in the Australian universities to increase recruitment of students; we do not seem to be anything like as ambitious here, there is a failure of nerve, a lack of ambition here which really we need to build on. Are we right to be interested in this issue, as you see the Committee is? Mr Bilimoria: It is a very important issue. It is one of Britain's great strengths and we could attract far more students, with the United States. There is not only the perception about the opportunities as a student in the United States, which is why so many Indian students go there, but also the reality of getting scholarships and funding in the United States, far more than over here. Q299 Chairman: That will reinforce the process that you were talking about earlier, that the crème de la crème of the Indian diaspora are actually in California and not in London and Cambridge? Mr Bilimoria: The more we can attract Indian students here, by providing them with scholarships, by making it easier for them to work to supplement their fees, to make it easier for them to stay on and work after they have finished their studies and gain some experience, once you get students over here you are building a life-long link with that person and they become ambassadors for Britain in India and you never lose that link. It is not just them, their children then are encouraged to come to the UK to study as well, so it is very, very important from a number of different angles. Dr Vyakarnam: I am delighted that the message is being taken in the Margaret Thatcher room. Chairman: Peter Bone has got another question later and he expressed equal pleasure for that comment as to one of your earlier comments. Q300 Rob Marris: Incidentally, great minds think alike, because the Chancellor of the University of Wolverhampton, in my own constituency, Lord Swraj Paul, last week was due to open the second office, I think, in India and this time in Delhi, so everybody is doing it. More prosaically perhaps than I asked last time, in terms of the differences and two-way barriers to trade and investment, you were mentioning earlier about the basic law being the same and that structures are very similar. Are there major differences in the structure of company law between the two countries, meaning that companies from India find it somewhat confusing when they want to become a company in the UK, or vice versa, if a UK company is setting up in India, in terms of just the legal framework and the structures of company law? Mr Bilimoria: The basic principles are almost identical, when it comes to company law, when it comes to accountancy, in all these areas commercial practices basically are very, very similar, the same foundations, the same basic principles. Yes, there are differences but it is not, to me, a huge challenge and there is excellent advice in most countries to help companies, in terms of lawyers and accountants. Q301 Rob Marris: They are fairly minor differences, are they, albeit they may be important, but they are fairly minor in terms of the structure of law and accountancy? Mr Bilimoria: The basic structure is very similar, yes. Chairman: Peter Bone, to whom you have given such pleasure with your evidence today. Q302 Mr Bone: I think it is one of our best evidence sessions. It is not the want of regulation, which is quite good, while we are in the Thatcher room I suppose. We have been told that really India is no more bureaucratic than the UK, so I would like your opinion on that, but also I would like your opinion on whether the sorts of rules and regulation of bureaucracy are actually going up or down in India and whether you think they are going up or down in the UK? Mr Bilimoria: The simple answer would be that the rules and regulations in India are still far too many and the licence raj is still very much in existence, and bureaucracy, as I said earlier on, is still perceived as and is in reality one of the big barriers in India to doing business in India and a barrier to investment, but it is going down. In the UK, I think, relatively, all things considered, we have a free market, relatively I think it is a very good place to do business in and a very easy place to do business in, but the regulations are increasing in this country and red tape is increasing, from all surveys. Q303 Mr Bone: Going on to one aspect that people associate with India, and some people would call it commission and some people would say it is corruption, and we understand that the Government is bringing in more transparency in decision-making perhaps to alleviate that, we are getting mixed messages on how much of a problem this is. I wonder what your views would be? Mr Bilimoria: In the 2005 Transparency International Corruption Perception Index, India is rated 88, China is 78, at the bottom of the table is a country 155, the UK is number 11, so corruption is an issue in India. However, again, from the surveys that I have conducted personally, for example, at the World Economic Forum in 2004, asking manufacturers there over the last decade had they seen corruption decrease and, if so, by how much; the answer I was given was by 70 per cent, which is significant. It is coming down, and again there is a direct correlation between the licence raj and the red tape and the bureaucracy being lifted and corruption going down, so the fewer permissions you need the fewer licences you need the less scope there will be for corruption. I think it is on a downward trend. The figure I heard at the World Economic Forum was very encouraging but it is still very much an issue in India. That said, companies operate in India very efficiently and refusing to have anything to do with corruption at all. Q304 Miss Kirkbride: As you know, the Committee is about to go to India next week, and whenever I am travelling somewhere where I do not go very often it is always nice to take a book that gives you a bit more of an insight and a perspective on the culture that is surrounding you. Do you have any good advice for the Committee as to what we might pick up at the bookshop? Mr Bilimoria: I would suggest a book by Gurcharan Das and he is an ex-senior executive of Proctor and Gamble and is a very well-known journalist now in India, and he wrote a book called India Unbound and it is an excellent book about a lot of the issues we have been talking about today. Q305 Miss Kirkbride: From Waterstone's and Ottakar's? Mr Bilimoria: It should be available, yes. Q306 Chairman: I would not recommend though that the more nervous members of the Committee read Maximum City: Bombay Lost and Found before they go, which I made the mistake of reading in Bombay myself last year. Is there anything else you would like to say to us, gentlemen, before we conclude this session; is there anything you feel we have overlooked? Mr Bilimoria: Thank you very much for asking us to be here. What I would just like to reinforce is that, at the IBPN, I am delighted that, in less than three years from the start that I had with a blank sheet of paper, we have achieved what we have. I think the momentum is certainly there. We are already making a big difference and we can make a huge difference in the future, and I do believe, we all believe, that a huge amount more of resource needs to go into promoting trade, business and investment between Britain and India, both ways. Chairman: Certainly, from what I have seen of the UK corporate sector, I agree with you entirely. I think the opportunities are there to be seized and they are not being seized at present. We congratulate you, we thank you for your evidence and declare the session closed. Thank you very much. |