Response to the previous Report,
and developments since
3. The evidence we have received suggests that perceptions
of India among UK businesses have improved considerably since
2006, but that further progress still needs to be made. The UK
India Business Council (UKIBC) told us that there had been "an
escalation in the awareness and interest in India",[5]
and that "British business has definitely woken up to India
[
] there is real momentum building".[6]
However, although the UKIBC's Chairman, Lord Bilimoria, considered
there was a special relationship between UK and India, he warned
that the "potential is far greater than what we are actually
achieving at the moment".[7]
4. Certainly, investments both from the UK to India
and from India to the UK have increased, and there have been many
recent high-value deals. These include the takeover of India's
fourth largest mobile operator, Hutchison Essar, by Vodafone of
the UK, which at around £5.5 billion[8]
was "the largest foreign investment in India's history".[9]
In the other direction, there were takeovers of Whyte & Mackay
by United Breweries Group, and of Corus by Tata, while Ford confirmed
the sale of Jaguar and Land Rover to Tata Group on 26 March 2008.[10]
UK Trade & Investment considered that "UK investment
is high - reflecting the fact that many companies are using non-export
models to pursue their business with India", such as business
process outsourcing (or offshoring), while UKTI stated that investments
in the other direction "should bring India into the big league
of investors in terms of value in 2007."[11]
5. The Trade and Consumer Affairs Minister, Gareth
Thomas, said one effect of such investment deals "has been
to increase the sense of urgency [
] about British businesses'
desire to get into the India market much more fully than they
have been able to do."[12]
British Expertise said the Tata-Corus deal had "crucially
improved foreign perceptions of India to new levels".[13]
The CBI also saw the deals as "positive developments",
"cause for encouragement but not complacency."[14]
UKIBC said it was "confident that recent highprofile
deals are merely a precursor to a flood of similar activity in
years to come".[15]
These investments in the UK by Indian businesses not only have
a significant economic impact in their own right, but have also
led to an increased awareness of the significance of the changes
taking place in India itself.
6. UKTI told us that the previous Report had "made
some valuable recommendations that added weight to UKTI's decision
to focus a greater proportion of resources on emerging markets,
to give greater priority to our bilateral trade policy work in
these markets and use our overseas network more strategically
to achieve our objectives in India."[16]
Trade and Investment Minister, Lord Jones, said of the Report
that UKTI "took it to heart and they worked with it as a
basis for change".[17]
(The Committee also examined the new UKTI strategy, Prosperity
in a Changing World, intended to shift focus towards key emerging
markets, in detail as part of its wider inquiry into the future
of UK manufacturing.[18])
7. The Trade and Industry Committee recommended that
the Indo British Partnership Network (IBPN) become "the de
facto Indo-British Chamber of Commerce and so the natural
voice of commerce in relation to Indian trade and investment issues."[19]
The IBPN has now been transformed into the UK India Business
Council (UKIBC).[20]
Its annual Government funding has been increased over
thirteen-fold, from £75,000 to £1 million, an increase
which we welcome unreservedly. (This and other trade support
changes are discussed in more detail below).
8. In addition, since the Report was published there
has been a high level of ministerial engagement. There were 11
visits from ministers, devolved administration representatives,
the Lord Mayor of London and the Mayor of London between October
2006 and June 2007 alone.[21]
This engagement has been used to increase business links. A delegation
of 150 business people accompanied the then Chancellor, Gordon
Brown, on a visit to India in January 2007.[22]
This was the largest ever delegation from the UK to visit India.[23]
During this visit Gordon Brown outlined his aim "to double
exports to India by 2010 and quadruple exports by 2020".[24]
The newly appointed Trade and Investment Minister, Lord Jones
of Birmingham, made India the destination for his first long-haul
visit in September 2007.[25]
Gordon Brown then visited India as Prime Minister from 2021 January 2008,[26]
accompanied by Lord Jones, the Secretary of State for BERR, John
Hutton, and a delegation of around 100 business people.[27]
9. After the warnings in the Trade and Industry
Committee's 2006 Report that the UK risked falling behind its
competitors in India, we are pleased to see that UK plc appears
to have 'woken up' to India. The Trade and Industry Committee's
Report contributed both to a change in attitudes in the UK towards
India, and increased UK engagement with India.
10. In particular, we are delighted that the Report
has contributed significantly to a shift in the Government's approach
to trade with India. This includes sustained high-level involvement
through UK ministerial visits to India, and visits from Indian
ministers to the UK, and a substantial increase in funding for
bilateral trade initiatives. We hope the visit to India by the
Prime Minister and Lord Jones in January 2008 will lead to
a further enhancement of bilateral links. We are pleased that
the Government seems to be taking the opportunity to deal with
the trade and investment issues that these visits offer.
11. The first ever UK-India Investment Summit was
held in London in October 2006, and addressed by the Prime Ministers
of both countries, Rt Hon Tony Blair and Dr Manmohan Singh.
A second investment summit had been planned alongside the prime
ministerial visit originally scheduled for November 2007. However,
no summit was held when the visit was delayed until January 2008,
perhaps because the Prime Minister's visit lasted only one-and-a-half
days, including a Sunday. While UKTI told us that the visit programme
offered senior UK business people opportunities to discuss bilateral
trade and investment matters with the Indian Prime Minister,[28]
UKIBC said it was "disappointing that the Investment Summit
did not happen as planned" although it also saw "a great
deal of opportunity for engagement, and UKIBC seeks to actively
encourage and support future dialogue."[29]
We note that the first bilateral UK-India Investment Summit
held in 2006 has not, yet, been repeated. We encourage the Government
to hold a follow-up summit and hope it will do so at an early
date.
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