House of Commons - Business and Enterprise

Select Committee on Business and Enterprise Fifth Report

3 Outstanding issues

30. India is the UK's largest visa operation: a record 336,000 visas were issued in 2006 (20% up on 2005).[99] However, UKIBC told us that "there are some pitfalls in the system that if rectified could be of gross benefit to cross border investment."[100]

31. In theory, the Business Express Programme (BEP) allows companies to obtain visas for their employees within 24 hours.[101] However, one BEPapproved company told us that they were experiencing lengthy delays—18 days on average—in getting visas.[102] We raised this issue with UKTI,[103] and after investigation it appears that this was due to UKVisa's requirement from the end of March 2007 for BEP Work Permit and Highly Skilled Migrant Programme applicants to submit documentary evidence. This evidence was then verified by an outside company, taking around 15 days. UKTI said that BEP members were informed that if a company was screened by that outside company, "individual applications submitted by that company would not require further checks." The company concerned was cleared in June 2007, and UKTI told us that this should no longer be an issue.[104] We were also concerned that the criterion of having worked for the same employer for six months before being eligible under BEP was not consistent with the working methods of a fast-moving industry like India's IT industry.[105] The Business Express Programme is welcome, and we expect that delays in obtaining visas will not be seen again in the future. The requirement for staff to have worked for a company for six months to be eligible for the Business Express Programme is a limitation which does not take into account the way in which companies in rapidly expanding sectors work and is, therefore, likely to damage UK-India trade. We welcome the Trade and Investment Minister's statement that this "is being looked at",[106] and hope a mutually acceptable solution can be found.

32. UKIBC also told us that relaxation of the mandatory requirement for a degree in the Highly Skilled Migrant Programme would help, noting that "many talented skilled nationals indeed many entrepreneurs do not have a degree".[107] The UKIBC suggest that there "could be recognition of qualifications that are not degrees and a greater encouragement for Indians with certain skills to come to the UK."[108] It also proposed a range of other options, including promoting the "working holidaymaker scheme" in India, UK-India exchange schemes, and greater recognition of Indian qualifications which are not of UK degree level. We urge the Government to keep under review the possible improvements in visa and other related arrangements that could be made to the mutual benefit of the British and Indian economies. The UKIBC should be well positioned to give advice on this important issue.

33. The UKIBC also noted that, being outside of the Schengen area, Indians resident in the UK require visas to enter those EU countries. As a result, procedures for business travel within Europe are restrictive for Indians resident in the UK, and this limits the ability of the UK to promote itself to Indian investors as the "gateway to Europe". When obtained, visas for travel to Schengen EU countries are usually single entry or for 36 months, which compares unfavourably to US and Canada "who often give 10 years multiple entry visas."[109] We urge the Government to explore with Schengen countries how the visa regime for Indians resident in the UK and needing to travel to other EU countries could be eased, or periods of EU visa validity extended considerably.

Education, research and qualifications

34. The Trade and Industry Committee highlighted that the UK had not been as good as its overseas competitors at promoting itself in India,[110] noting the relative success of the US in particular.[111] Although our predecessor Committee saw signs of this changing, it seems that the relative underperformance of the UK in Indian higher education has continued. Although UKTI told us that the flow of students to the UK was increasing, with over 23,000 Indian students currently studying in the UK (and another 5,000 studying for UK qualifications in India through partnerships with UK accredited institutions),[112] the UKIBC Chairman, Lord Bilmoria, said the UK's relative position had worsened. While numbers had risen five-fold in the last five years, "the reality is that the United States is still by far the number one destination for Indian students and at number two the Australians have overtaken the United Kingdom. […] we have got to continue to make it far more attractive for Indian students to come here and study".[113] The City of London raised concerns that the UK's share of Indian students studying abroad had fallen relative to the US, and fallen behind that of Australia which was now the second most popular destination.

35. The City of London told us that the attractiveness of study in the UK was being constrained by difficulties in securing visas (as noted above) and limitations on working in the UK after graduation.[114] The Trade and Industry Committee referred to the surprising anomaly that Indian graduates in Scotland can stay to gain employment experience (and income to recoup some of the cost of their studies) for two years, while such graduates can only remain in England and Wales for one year.[115] This is because the 'Fresh Talent Scheme' allows non-EEA nationals who have completed an HND, degree, masters or PhD course at a Scottish university or college (while living in Scotland during their study) to apply to stay to work for up to two years in Scotland.[116] Indeed, the IBPN (in evidence prior to its transformation into the UKIBC) said that two years may not be enough, noting that some professional qualifications "can require three years or more".[117] These include accountancy where the time limit prevents individuals from gaining the work experience needed to qualify as a professional accountant in the UK, which takes 3-5 years.[118]

36. We agree with UKIBC that it is "vital that foreign students have the same opportunities to stay on in the UK and seek employment, regardless of where they studied."[119] Despite the Trade and Industry Committee's earlier recommendations for change, it remains the case that after graduation, Indians who have studied in the UK can remain in Scotland for two years, while only being able to remain in England and Wales for one year. We call on the Government not only to end this anomaly by extending the period in England and Wales. It should also to extend the period students may remain in the UK for qualifications in those professions that require specific periods of work experience.

37. Dr Vyakarnam, a UKIBC board member, told us that India saw knowledge and higher education as "essential" for "connecting to the knowledge base and the UK higher education institutions".[120] We welcome the fact that the Government is "assessing the viability" of five-year research visas for research scientists visiting the UK frequently and look forward to hearing about the progress of this assessment.[121]

38. UKIBC's official report of the visit to India by the Prime Minister and Trade and Investment Minister in January 2008 states that agreement was reached on an "Education Forum to work towards the early conclusion of an Education Partnership Agreement", and a memorandum of understanding regarding a "India-UK Higher Education Leadership Development Programme", and a range of other initiatives.[122]

39. There have been some successes in building higher education links. The UK-India Education and Research Initiative (UKIERI) aims to improve UK-India educational links through work on higher education and research, schools, and professional and technical skills. UKTI officials told us this was "very much on track", albeit a "work in progress".[123] UKTI estimated that it had "almost doubled substantial educational linkages between the UK and India in its first 18 months", with 190 new links and 25 'significant events' staged.[124] UKTI officials also said that there was "a huge appetite for expanding that programme" to cover "business, education, vocational training and skill development".[125] The Trade and Industry Committee stated that funding for the UKIERI was insufficient.[126]

40. Many UK universities are seeking to engage more closely with India, and this process has been actively encouraged by the Indian High Commission in London. For example, the Indian government has provided funding to enable the establishment of the Jawaharlal Nehru Professorship in Indian Business and Enterprise at the Judge Business School in Cambridge. The Vice Chancellor of Cambridge University, Professor Alison Richard, who visited India in January of the year, told the committee, "The purpose of our visit to New Delhi, Bangalore, Kolkata and Mumbai was to increase the visibility of Cambridge's many links with India, to give formal recognition to some of our existing collaborations, and to explore and build new partnerships in both the academic and the industry sectors. […] Looking ahead, it is fundamentally important that Cambridge's relationships with India should be real partnerships, characterised by exchange rather than a one-way flow, and I am pleased to report that we signed five MOUs [Memoranda of Understanding] with academic institutions and industry, primarily to encourage Cambridge students and academics to spend time in India."[127] This includes an MOU on collaboration with the Confederation of Indian Industry (India's equivalent of the CBI), which the signatories believe will result in new opportunities in manufacturing innovation, entrepreneurial learning and sustainable development.[128]

41. We welcome evidence of the growing interest by UK institutions in India but believe there is no room for complacency; the USA and Australia remain more attractive locations for Indian students and the UK Government must work closely with the Higher Education sector to ensure opportunities to build the kind of links being developed by Cambridge University are maximised.

42. Education and research links are a vital part of the bilateral UK-India relationship. We welcome the new Education Forum that is being established to work towards a bilateral Education Partnership Agreement, and look forward to the Government providing further details in its response to this Report. We repeat the Trade and Industry Committee's recommendation that the Government reassesses its level of commitment to the UK-India Education and Research Initiative with a view to increasing funding.

43. The issue of mutual recognition of qualifications has been raised with the Committee by both the UK and India.[129] This is clearly a sensitive and difficult area, but the Trade and Consumer Affairs Minister suggested that a future EU-India trade agreement (see Chapter 4 below) could bring "opportunities for us to get some of our qualifications recognised within India, just as much as they have issues they want sorted out within the European Union."[130]

44. We are concerned that, although more Indian students are coming to the UK in absolute terms, the UK's share is declining relative to its competitors, notably Australia. We call on the Government to undertake a comprehensive examination of the ways of making the UK a more attractive place to study for Indian students, including overcoming visa issues and increasing the length of time Indian students can remain in the UK after graduation.

JETCO: progress since the Report

45. The previous Report looked in detail at opportunities in the Indian market by sector. The UK-India Joint Economic and Trade Committee (JETCO) is now the principal forum for bilateral discussions about trade barriers and liberalisation. Ministerial level JETCO meetings are held annually, and there have been four so far, the most recent being held in December 2007.[131] A number of working groups have been established, covering: agribusiness, healthcare, high-technology, infrastructure, legal services, accountancy, financial services, and intellectual property rights.

46. Views on progress through JETCO so far were mixed. The CBI said that the JETCO process was "beginning to gather pace and deliver results in some of the main sectors".[132] However, it also cautioned that JETCO progress was "not comprehensive and members have voiced concern over the lack of clear objectives, deliverables and time lines for some parts of the process."[133] It said JETCO's "full potential has yet to be realised".[134] The Chairman of the UKIBC said JETCO was "a terrific process" which was "working very well", citing the 2006 bilateral investment summit as a direct outcome from JETCO.[135] He said the JETCO was "bringing business, the Civil Service and government from both countries together around the table in a structured way."[136]

47. There has been significant progress on discriminatory regional taxes and import tariffs on spirits, which were affecting UK whisky exporters in particular.[137] This appears to have been resolved since the Report: India is to reform its discriminatory tariffs on imported spirits, ending the levying of "additional charges" on wine and spirits that exceed the World Trade Organisation (WTO) permitted maximum (or 'bound') level. Pressure applied by the UK through JETCO and by the EU appears to have been successful, and the EU's WTO dispute settlement case was suspended before full proceedings had begun.[138]

48. However, other areas have not seen such visible success. Many of the areas where there has been slowest progress are those the previous Report identified as the most protected sectors of the Indian market.[139] UKTI said the areas JETCO had focused on included services—financial, including banking and insurance, legal, accountancy, education and retail—and wine and spirits (as noted above). UKTI's evidence was not particularly encouraging on prospects for progress in financial services, which was "likely to be slow", and retail, where "there has not been movement on opening up general retail to FDI (Foreign Direct Investment)".[140] However, UKTI noted that new legislation was expected on education and accountancy.[141] On legal services, Clifford Chance told us that progress had been "disappointingly slow",[142] although they remained "confident that the JETCO process will have positive results for liberalisation."[143]

49. In January 2008, the Trade and Consumer Affairs Minister, Gareth Thomas, confirmed that the biggest blockages remained around financial, retail and legal services, while also noting that intellectual property rights and government procurement remained problematic. He said that these areas could all see "substantial progress" as a result of the EU-India free trade talks that have begun since the previous Report (this is discussed in more detail in chapter 4).[144] The Trade and Investment Minister, Lord Jones, told us that he had lobbied on legal and financial services during his September 2007 visit.[145] He also noted that India's infrastructure investment plans may result in autonomous liberalisation by India as it realised it would maximise the benefits of its own investment by using foreign (i.e. UK) legal, banking and accountancy expertise.[146]

50. Aside from the success on tariffs on whisky imports, recent progress through JETCO in key areas for UK businesses—financial, legal, accountancy, and retail services—appears to have been slow. While we recognise the political challenges involved in addressing these issues in India, particularly in the run-up to a general election there, due by 2009, we believe that further liberalisation in these areas will bring real benefit to India itself. We therefore seek assurances from the British government that the JETCO ministerial meeting in December 2007 and the Prime Minister's January 2008 visit have given fresh momentum to the process. The JETCO system requires strong and sustained commitment on both sides if it is to deliver its potential benefits to both India and the UK.

51. There is scope for improving aspects of the way JETCO works. We were surprised that there are no working groups in either of the important areas of trade facilitation[147] or education. Asked whether there should be an education working group in JETCO, the Trade and Investment Minister, Lord Jones, did not fully address the question, although he did admit that education did not get sufficient recognition in the JETCO process, and in UKTI generally.[148] We are surprised at the lack of working groups on education and trade facilitation. The Education Forum (noted in para 38 above) agreed earlier this year may bring progress, but we urge the Government to consider whether there are sufficient issues for an education working group within JETCO, especially if the Forum does not make speedy progress.

52. UKTI officials said that the JETCO working groups on agriculture and health could benefit from further work on the UK side.[149] There also appears to be a problem in ensuring consistency between JETCO working groups' approaches. The UKIBC told us that it was to establish a JETCO website to increase the information on the groups' activities and consistency between them,[150] and indeed the UKIBC's website now includes JETCO pages detailing its purpose, achievements, UKIBC involvement, minutes from previous meetings and an organogram of the working groups and their chairs and membership (though as yet no specific details for each group).[151] UKIBC Chairman, Lord Bilmoria, also told us that the former IBPN had sought to get all JETCO chairs and co-ordinators together to share information and work on common issues.[152]

53. We support initiatives to bring the chairs of the various JETCO working groups together, and if this works well we propose that this arrangement be formalised. We also strongly support the establishment of JETCO pages on the UKIBC website, and look forward to additional information on the various working groups' progress and activities being added in future. However, this web presence can only help improve consistency across the various working groups if the information it provides is accessed and used by all involved.

99 Ev 80 (UKTI), para 4.9.2 Back

100 Ev 69 (UKTI) Back

101 Q167 Back

102 Ev 37 (Arrk Group) Back

103 Q54-56 Back

104 Ev 89 (UKIBC) Back

105 Q168 - 170 Back

106 Q170 Back

107 Ev 89 (UKIBC) Back

108 Ev 89 (UKIBC) Back

109 Ev 89 (UKIBC) Back

110 HC (2005-06) 881, para 127 Back