Annex 1
EXTRACTS FROM REPORT ON THE VISIT OF THE
RIGHT HONOURABLE THE LORD MAYOR, ALDERMAN DAVID BREWER CMG TO
INDIA, SATURDAY 18 MARCH TO TUESDAY 28 MARCH 2006
EXECUTIVE SUMMARY
Introduction
1. The Rt Hon the Lord Mayor visited four
cities in India—Delhi, Mumbai, Chennai and Hyderabad from
Saturday 18th to Tuesday 28th March 2006. The Lord Mayor was
accompanied by The Lady Mayoress and by a large business delegation—the
composition of which varied during the visit. A full list of the
business delegation is included on the final page.
Aim
2. This visit to India followed that of
Sir Clive Marin in 2000 and Sir Robert Finch in 2004 and many
of the issues discussed were similar to those raised on the two
previous visits. The principal aim of the visit was to promote
the City of London and in particular its financial and business
services sectors, and to hold discussions in each city with business
leaders and with ministers and officials. In each of the four
cities he visited, the Lord Mayor sought to emphasise the reasons
behind London's success as an international financial centre and
the role that London wished to play internationally with its expertise
in many key areas—in particular insurance, banking, legal
services and Public Private Partnerships (PPP).
Programme
3. The Lord Mayor and his party spent a
full day in Delhi, before travelling on to Mumbai, where he undertook
a busy programme for a further two days. He then flew on to Chennai
and finally to Hyderabad. A comprehensive programme was arranged
in each city by the British High Commissioner and his two Deputy
High Commissioners and the Lord Mayor had the opportunity to meet
many senior and influential people in national, state or local
government and in business, in each of the cities he visited.
Formal seminars or round table discussions with representatives
of the financial services sector took place in Delhi, Mumbai,
Chennai and Hyderabad, with liberalisation of the legal and insurance
sectors, legal education and training, and London listing for
Indian companies as the principal themes. The Lord Mayor was supported
by a substantial business delegation in each city, which varied
in composition according to the topics being discussed. He paid
official calls on a number of Government Ministers associated
with financial and economic affairs, on the Governor of the Reserve
Bank of India, the Permanent Member of the Securities and Exchange
Board, and the Insurance Commissioner. He also called formally
on the Chief Minister of Delhi and the Chief Minister of the State
of Andhra Pradesh.
Detail
Visit to Delhi
4. The Lord Mayor's short stay in Delhi
was hosted by the British High Commissioner, Sir Michael Arthur,
who had arranged a number of valuable and high level calls for
him. In his initial briefing, the High Commissioner highlighted
the extraordinary rate of growth of the Indian economy, which
stands at 8% at present and is likely to grow. He also emphasised
the dynamism of the country, the very high proportion of the population
under the age of 25 (54%), the high levels of academic achievement
and the ever increasing air links with UK This had grown from
19 flights a week in 2004, to 66 in 2006 and over 100 weekly flights
are projected in 2007. All this is indicative a nation very
much on the move and establishing itself as a major world economy.
5. The Lord Mayor was able to emphasise
in his various meetings and speeches that the UK was the natural
partner for India in Europe and that London was best placed to
provide the expertise, the business links and the source of capital
for Indian businesses seeking to grow not only in Europe but globally.
He described the strengths of the City, its wish to work with
and contribute to India's development, and the City's desire to
see further liberalisation in the sector, not least increased
FDI ceilings for banking and insurance.
6. He built on this theme at a seminar in
Delhi hosted by FICCI and entitled "The City of London—Your
Gateway to Global Business". Following his general introduction,
speakers from the London Stock Exchange, the Law Society and Lloyd's
of London expanded on London as the natural place to do business.
A speaker from FICCI then complemented this with an address on
Indian investment successes in UK and on the investment climate
in India. With high growth and low inflation, India is an excellent
market for UK expertise. Investment of some $200 billion is needed
in India in the next four years in infrastructure development,
and Indian companies are looking to UK companies for technical
expertise.
7. The Lord Mayor also attended and spoke
at a roundtable on Globalisation and Economic Crime organised
by the Commonwealth Business Council and at a Reception for the
alumni of CASS Business School, London Metropolitan and London
City Universities, held in co-operation with the British Council.
He then called on a number of senior ministers and officials,
including the Finance Secretary, the Chief Minister of Delhi,
the Deputy Chairman of the Planning Commission and the Minister
of Commerce.
8. The Finance Secretary (Mr Ashok Jha)
was optimistic that the insurance ceiling would rise to 49% either
in this or the next session of parliament, but cautioned that
the Reserve Bank of India was less comfortable over any similar
acceleration in banking liberalisation. He expressed an enthusiasm
in India learning from UK experiences of PPP and agreed this is
likely to be raised at the UK-India Investment Summit planned
for later this year.
9. Deputy Chairman of the Planning Commission,
(Dr Montek Singh Ahluwahlia) one of the government's leading economic
thinkers gave a broader, more strategic view of India's development,
and explained the need to strike a balance between the Government's
objectives for economic reform and the political constraints imposed
by the legislature. He was more optimistic about the longer term
prospects for liberalisation, including pensions. He undertook
also to look into the issues raised by Standard Chartered Bank
about constraints imposed by the Indian Government on bank lending,
in particular to small business seeking to get involved in the
infrastructure sector—one of the Government's priority objectives.
He endorsed the idea of discussing PPP at the Investment Summit.
10. The Commerce Minister (Shri Kamal Nath)
emphasised his personal commitment to more liberalisation and
reiterated his belief that so much more could be achieved bilaterally
between UK and India in this regard—provided the EU's common
commercial policy did not impose too many restrictions. The Minister
also confirmed that his officials were working on a paper addressing
the concerns of UK banks regarding policy and regulatory issues.
11. The Lord Mayor also had a most useful
call on the Director General of the CII (Mr Srinavasan) who commented
once again on the remarkable growth rate in India and his confidence
that this would be maintained. Infrastructure investment and the
use of UK expertise were both seen as key ingredients in this
growth and thus presented significant opportunities for UK companies.
The CII looked forward to their visit to London in June and also
to the possibilities of hosting a major financial services summit
in Mumbai towards the end of the year at which the promotion of
Mumbai as a Regional Financial Services Hub would be the principal
theme. Other areas of activity being undertaken by the Confederation
were also addressing Pensions, Health Care, Infrastructure Development
and PPP. The Lord Mayor indicated his hope that the City and the
delegates who accompanied him would have the opportunity to contribute
to the Mumbai conference at the end of the year and also to any
activities planned for London in September, when it was hoped
that the Prime Minister of India might be visiting.
Visit to Mumbai
12. The Lord Mayor and party then flew on
to Mumbai, where his visit was hosted by the Deputy High Commissioner,
Ms Vicki Treadell. A major element of the visit to Mumbai was
to discuss the City's strong desire to see Mumbai develop as a
Regional Financial Hub and for the City of London Corporation
to support this through the opening of a liaison office in Mumbai—similar
to those recently established in Beijing and Shanghai. The Lord
Mayor met and briefed representatives of the British business
community in Mumbai on these plans at a breakfast meeting and
listened to some of the issues which they faced in doing business
in India. He also attended a further reception hosted by Cass
Business School for their Indian alumni, similar to that held
in Delhi the previous day.
13. The Lord Mayor called on the Permanent
Member of SEBI—the Securities Exchange Board of India (Mr
T C Nair), and also on the Governor of the Reserve Bank of India,
(Dr Yaga Reddy). At SEBI, Mr Nair generously observed that the
world's financial system could not survive without the City of
London. In response the Lord Mayor briefed him on the plans for
the City's liaison office. which was welcomed. The Lord Mayor
also raised a number of issues which currently gave cause for
concern. These included a plea by the London Stock Exchange that
SEBI should look into the rule requiring Indian companies to list
equity securities firstly in the domestic market before being
able to list in London. Delegates accompanying the Lord Mayor
also raised the issue of a very underdeveloped corporate debt
market and of the lack of recognition of brokers in the debt market,
which made it very difficult to do business. This in turn affected
the benefits that trading in this market would bring to Indian
business and the economy generally. SEBI officials appeared sympathetic
to this argument and said that they were taking steps to develop
the corporate bond market.
14. At the RBI the Lord Mayor and the visiting
delegation raised a series of issues such as capital account convertibility,
development of the Pensions Bill, foreign ownership of banks and,
once again, the trading problems for brokers in the corporate
debt market. The Governor gave some comfort that all these issues
were recognised as causing difficulties for overseas firms doing
business in India and were all being addressed within an overall
financial services "road map". This was working its
way through legislative approval and in some areas were a matter
of intense political debate. He was therefore unable to give much
comfort on the likely time scales for this legislation, but recognised
that the measures were all necessary in order to sustain the growth
of the Indian economy at its current rate—and indeed to
comply with some of the WTO requirements.
15. The Lord Mayor then attended and spoke
at a well attended meeting hosted by Bombay First. This organisation
mirrors Think London, and aims to provide the focus to generate
interest, commitment, inward investment and expertise in developing
Mumbai as a major business centre. Emphasis is rightly being placed
on infrastructure investment, particularly through PPP, and Mr
Stephen Harris of IFSL gave a useful indication of the areas where
PPP might with advantage be used as a development technique. He
cited hospitals, schools, social housing, airports and roads as
ideal vehicles for PPP but warned that global sources of such
expertise were woefully limited and heavily overcommitted. A memorandum
of Understanding between IFSL, Toronto Financial and Bombay First
was formally signed at the meeting, which should allow Mumbai
to take advantage of financial services expertise in both Toronto
and London.
16. The Lord Mayor joined representatives
of the Law Society and the College of Law at a briefing for Indian
law trainees at which the QLTT (Qualified Lawyer Transfer Test)
was explained and enthusiastically received. This test and the
training which precedes it will take place twice yearly in both
Delhi and Mumbai and will allow Indian lawyers to qualify as English
solicitors without having to travel to UK. Clifford Chance, two
of whose partners accompanied the Lord Mayor as members of his
business delegation, announced the offer of two scholarships annually,
each worth £1,360 to cover the costs of both tuition and
examination.
17. The Lord Mayor also hosted a well attended
breakfast meeting in the Taj Palace Hotel for members of the insurance
industry at which a number of issues were discussed. These included
percentage limitations on foreign ownership and the aspiration
to increase this from 26% to 49%. He was briefed that the insurance
sector in India was still hugely untapped and that there was huge
potential for new products and for new players in the market.
This offered considerable opportunities for UK insurance companies,
even with the current FDI limit.
18. At the request of the Securities and
Investment Institute, the Lord Mayor was pleased to be able to
present certificates to four graduates of the SII training course
which had taken place in Mumbai. He also held private meetings
to discuss some of the practical issues associated with the opening
of the City Corporation's liaison office in Mumbai and possible
staffing opportunities. A separate report on these discussions
has been produced and circulated.
Visit to Chennai
19. The visit to Chennai was hosted by the
Deputy High Commissioner for South India, Mr Mike Connor. The
Lord Mayor's first engagement was to attend the annual Queen's
Birthday Reception at the Residence. The Lord Mayor and business
delegation were able to meet a wide cross section of the Indian
business community and others, to gain a perspective of the issues
affecting bilateral relations between UK and South India. He gave
an opening address at an event hosted by the London Stock Exchange
to promote the Alternative Investment Market among small and early
stage companies, largely in the ICT and biotech sectors.
20. He also attended a follow up lunch for
the CEOs of South India-based companies already listed on the
London Stock Exchange and for prospective clients. Other elements
of the programme included a visit to SCOPE, Standard Chartered
Bank's word-wide back office operation which is based in Chennai.
The Lord Mayor was much impressed by the size of the operation
and by the highly motivated management team. They were able to
demonstrate the efficiencies of centralising its support services
in India, not only in cost saving terms ($80 million since inception)
but operationally through the provision of streamlined banking
and customer services.
21. He also inaugurated a roundtable event
jointly hosted by the Commonwealth Business Council and the Law
Society to discuss the liberalisation of legal and professional
services in India. The event was notable for a wide ranging and
sometimes heated debate on liberalisation and the possible adverse
affect on the domestic Indian legal industry. Delegates were briefed
on the openness of the UK legal market and the free access offered
to suitable qualified foreign lawyers, which had enabled London
to thrive as an international business centre. Many misconceptions
were dispelled on the aspirations of foreign law firms wishing
to practice law in India, in particular representation in court
and the benefits of increased trade and investment which would
follow the opening up of the legal industry. The Law Society and
CBC both felt that significant progress had been achieved as a
result of this seminar and a comprehensive report on the discussion
and the outcomes has been produced by the CBC.
22. The Lord Mayor and Lady Mayoress then
had the opportunity to visit a fishing village some 20 miles south
of Chennai for a brief weekend's respite before the final element
of the visit. In Mamallapuram, they were able to see at first
hand some of the effects of the Tsunami which had occurred in
December 2004. Whilst there had been no casualties in that
area (unlike the City of Chennai, where 700 had died), the sea
had retreated four kilometres in seven minutes, before inundating
much of the low lying areas on the edge of the shoreline.
Visit to Hyderabad
23. The final leg of the Lord Mayor's visit
to India took him and some of the business delegation to Hyderabad,
where he and his business party were hosted by the Head of the
British Trade Office, Bangalore (Mr Andrew Dinsley)—who
also has responsibility for the British Trade Office in Hyderabad.
The programme included a well attended seminar sponsored by FICCI,
similar to that held in Delhi the previous week. The Lord Mayor
introduced a team of speakers from London on the theme: "The
City of London—your Gateway to Global Business" each
of whom addressed specific topics on London as a business centre.
These included addresses on London as a source of capital (the
London Stock Exchange), London as a source of advice (The Law
Society), London as a place to do business (Think London) and
London as a source of expertise on Insurance Commercial Risk (Mr
John Cooke).
24. The Lord Mayor then paid a courtesy
call on the Chief Minister of the State of Andra Pradesh (Dr Rajashekar
Reddy) and also on the Chairman of IRDA, the Insurance Regulatory
and Development Authority (Mr C S Rao). Mr Rao gave him a greater
understanding of the likely amendments to the Insurance Act and
on the role of the IRDA in further liberalisation. He was optimistic
that the changes in limitations on foreign ownership would be
raised—possibly this year. He also indicated his strong
support of the need to do so, in order to encourage greater participation
in the insurance market in India—particularly in the Life
sector. He cautioned however that changes in primary legislation
were still required for some of the measures he wished to introduce
and thus some timetable issues, but he saw eventual change as
inevitable.
25. There was additional discussion at this
meeting on the need for the establishment of an Institute for
Insurance and Risk Management, which the Commissioner was promoting
strongly. He saw this Institute as a having a role to play across
the whole of Asia and was looking for accreditation globally,
particularly from the London based Institutions.
26. The Lord Mayor then attended a lunch
hosted by the London Stock Exchange similar in format to that
held in Chennai, to meet existing and potential investors in London
and to discuss listing on the London Exchange. He paid a visit
to the impressive HSBC Global Support Centre, recently opened
in the new Hi-Tech City on the outskirts of Hyderabad. Here he
was briefed on the scope of the operation and the way in which
HSBC was able to manage much of its back office operation from
this single site, with very significant cost savings and improvements
in efficiency.
27. His final engagement was a meeting with
Hyderabad Chapter of the Young Presidents' Organisation. The Lord
Mayor briefed the members on London as an international finance
and business centre and answered a series of challenging and interesting
questions. The meeting was arranged through Mr Karan Bilimoria,
Chairman of the Indo British Partnership Network, whose presence
in Hyderabad happily coincided with that of the Lord Mayor.
Comment
28. The Lord Mayor is very grateful for
the way in which he and his business delegation were received
throughout the visit. A significant amount of background and networking
activity was undertaken by the delegates during the mission and
all felt that the aims of the visit had been achieved. The visit
allowed the party to emphasise a wide range of issues, such as
FDI levels in insurance and banking; access for legal services;
listing on the London Exchanges; the placing of Indian businesses
in London; legal and financial services training; and the role
of the City of London as a source of capital, expertise and advice.
Whilst the party had been able to see that reform in the Indian
financial services sector was indeed underway, it is clear that
the pace of reform remains somewhat cautious and in certain cases
primary legislation through parliament is required before change
can be implemented.
29. The Lord Mayor was impressed by all
that he found and at the clear optimism that the Indian economy
is growing at a steady and stable rate. Development of infrastructure
however is clearly a key factor in sustaining this rate of growth
and techniques such as PPP is seen as an important element, particularly
in highways and airports. The airports in Mumbai, Chennai and
Hyderabad all require significant redevelopment, some of which
is already in progress. Mumbai in particular has significant infrastructure
challenges to overcome if it is to realise its aspiration to be
come a regional financial hub. The continuing role of organisations
and pressure groups such as Bombay First to influence national
and state government to drive through infrastructure investment
is pivotal.
30. The visit coincided with the Chancellor's
statement in the budget of the need to promote still further UK's
strength in the financial services sector and of the need to direct
greater emphasis on trade and on the exchange of financial services
between the UK and India. The Lord Mayor was able to promote this
in his various addresses and meetings. He also emphasised strongly
that whilst London was the principal financial and business centre
in the UK, the term "the City of London" was very much
a brand name, rather than a physical location. Thus he represented
Edinburgh, Manchester, Birmingham and other major UK financial
centre as much as he represented London. His delegation included
representatives from all four of these cities, each of which are
significant international financial centres in their own right,
in particular Edinburgh.
LORD MAYOR'S VISIT TO INDIA—MARCH 2006
BUSINESS DELEGATION
|
| | Delhi
| Mumbai | Chennai
| Hyderabad |
|
| Banking and Finance |
| | | |
|
| Standard Chartered Bank | Sir Thomas Harris
| x | x
| x | -
|
| JP Morgan | Mr Richard Kaye
| - | x
| - | -
|
| University Alumni | |
| | |
|
| Cass Business School | Ms Erin Quinn
| x | x
| - | -
|
| Dr T Dzendrowskyj
| x | x
| - | -
|
| Mr Caleb Hulme-Moir
| x | x
| - | -
|
| Law | |
| | | |
| Law Society | Mr Hugh McDermott
| - | x
| x | x
|
| College of Law | Mr Nick Olley
| x | x
| x | x
|
| DLA Piper | Mr Matthew Saunders
| x | x
| - | -
|
| Olswang | Mr Toby Greenbury
| x | x
| - | -
|
| Clifford Chance | Mr Chris Wyman
| - | x
| - | -
|
| Mr Magnus Rodrigues
| - | x
| - | -
|
| Eversheds | Mr Parmjit Singh
| - | x
| - | -
|
| Mr Mike Seabrook
| - | x
| - | -
|
| Herbert Smith | Mr Chris Parsons
| x | x
| - | -
|
| London Markets | |
| | |
|
| Stock Exchange | Mr Hugh Sandeman
| x | x
| x | x
|
| Metal Exchange | Mr Simon Heale
| x | x
| - | -
|
| Insurance | |
| | | |
| ABI | Ms Susan Yavari
| x | x
| - | -
|
| ABI | Mr Stephen Haddrill
| x | -
| - | -
|
| Marsh | Mr Ian Haynes
| x | x
| - | -
|
| Prudential | Mr James Wilcox
| x | -
| - | -
|
| Paterson Martin Ltd | Mr Michael Wade
| - | x
| - | -
|
| Lloyd's of London | Mr James Sutherland
| x | x
| - | -
|
| Standard Life | Ms Katie Paterson
| x | x
| x | x
|
| Trade and Investment |
| | | |
|
| UKTI | Mr Martin Raven
| x | x
| - | -
|
| Think London | Mr Anupam Jhunjhunwala
| x | x
| x | x
|
| British Telecom | Mr Allen Ma
| x | -
| - | -
|
| IFSL (PPP) | Mr Stephen Harris
| - | x
| - | -
|
| C'wealth B'ness Co | Mr Sanmit Ahuja
| x | x
| x | -
|
| IFSL (LOTIS) | Mr John Cooke
| x | x
| x | x
|
|
| 
