Conclusions and recommendations
Response to the previous Report, and developments
since
1. The
IBPN has now been transformed into the UK India Business Council
(UKIBC). Its annual Government funding has been increased over
thirteen-fold, from £75,000 to £1 million, an increase
which we welcome unreservedly. (Paragraph 7)
2. 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. (Paragraph 9)
3. 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. (Paragraph 10)
4. 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. (Paragraph 11)
Resources
5. The
Trade and Industry Committee warned that an underresourced
UKTI team risked the UK missing the 'last train' in India. We
wholeheartedly welcome the increased resources available to UKTI
in India. Their Report also identified a lack of familiarity with
India and/or an inability to take advantage of the opportunities
in India among UK businesses. We believe that these additional
resources will help to address remaining issues in this area.
We also warmly welcome UKTI's reassurances that its India activity
will be protected from any cuts from the 2007 Comprehensive Spending
Review settlement. (Paragraph 14)
Salaries
6. We
welcome the improvements in salaries following UKTI's review,
and expect the situation to be closely monitored in future. Locally
engaged staff account for over 80% of UKTI's human resource in
India, and it is vital that UKTI is able to employ and retain
the best. (Paragraph 15)
India's 'second cities'
7. India's
growth continues, making the previous Report's conclusions on
India's 'second cities' increasingly pertinent. UKTI believes
its resources to be appropriately distributed at present, but
it must be capable of moving resources in India rapidly as and
when regional markets develop. We look to UKTI to take the results
of the UKIBC research project into 'second cities' into account
in due course. (Paragraph 16)
8. We welcome, as
the Trade and Industry Committee previously welcomed, the strengthened
focus on emerging markets adopted by UKTI under its new strategy.
We also welcome the new resources from the High Growth Markets
Programme, and look forward to India being given due weight in
the Programme once the remaining specialists have been appointed.
It is very important that UKTI carries out an assessment of their
effectiveness in engaging the mid-sized corporate sector at the
earliest appropriate moment. (Paragraph 18)
9. We emphasise the
importance of UKTI continuing to ensure that the SME sector is
kept aware of appropriate opportunities in the Indian market,
including any arising from supply chains supporting contracts
secured by larger companies. We welcome the recent signing of
a memorandum of understanding between the British Chambers of
Commerce and its Indian counterpart, and hope that this will lead
to a substantial increase in bilateral SMEto-SME contacts.
(Paragraph 19)
RDA's and other institutions in India
10. While
we are pleased that UKTI has acted promptly on its review of regional
inward investment and trade support arrangements, we have not
yet studied in detail the substantial pieces of analytical work
on which the review was based. It is very likely that the Committee
will return to this issue in the future. (Paragraph 21)
11. We support co-location
of Regional Development Agency and devolved administration offices
with posts, as appears to be happening in India, as this is likely
to reduce confusion and duplication of effort. We also recommend
that India be one of the three pilot markets suggested for trialling
new inward investment arrangements. (Paragraph 22)
12. While the establishment
of offices by different public and private sector organisations
in India is a sign of genuine and committed UK interest, we are
concerned that the influx of organisations, if not properly co-ordinated,
will increase confusion, with too many bodies with overlapping
objectives. We welcome the City of London's commitment to continue
to liaise with UKTI and avoid duplication of effort. We believe
all organisations should co-ordinate with UKTI to ensure their
work complements UKTI's effort and does not duplicate or compete
with it. We note the finding in the UKTI review that bodies involved
in inward investment other than Regional Development Agencies
and devolved administrations are not part of coordinated
arrangements through the Committee on Overseas Promotion. UKTI
should seek to bring these other bodies within the co-ordinating
framework. (Paragraph 23)
The UK-India Business Council
13. The
Trade and Industry Committee's Report planted the seed for the
new UK-India Business Council (UKIBC), and we warmly welcome its
birth. We hope that it will continue to enhance bilateral trade
and investment relations between UK and India. We thank all the
members of the former Indo-British Partnership Network for their
work, which has enabled its evolution into the more ambitious
UKIBC. (Paragraph 25)
14. We agree that
the Government's increased financial commitment should be matched
by a contribution from industry. We welcome the tiered cost approach
to membership costs that has been adopted, but we urge the UKIBC
to monitor the extent to which SMEs are effectively engaged in
its activities. We expect the new UKIBC to build its membership
across all sectors and sizes of UK and Indian businesses, and
so truly become the de facto IndoBritish Chamber of Commerce
which the Trade and Industry Committee envisaged.
(Paragraph 26)
15. Although there
are legitimate demands for financial accountability from government,
these must be managed in a way which does not compromise the independence
of the UKIBC. The new organisation is not an arm of government:
if it is perceived as such it will not be able to raise the necessary
matchfunding from the private sector. The UKIBC should be
a voice for business and enterprise in governmentboth in
India and the UKand not vice versa. Any perception that
it is simply an adjunct to UKTI will undermine its effectiveness.
We expect UKTI and BERR to recognise this in their work with the
UKIBC and accept that, if it is to flourish and build its reputation
in the commercial world its freedom must not be unduly constrained.
(Paragraph 27)
16. During evidence
taking, we speculated that providing UKTI services through the
ChinaBritain Business Council rather than through UKTI could
be interpreted as quiet 'privatisation' of UKTI services. This
was not fully rebutted. If such a process developed, it would
represent a significant shift in UKTI policy, and one which, if
successful, could raise major issues for the way in which the
organisation delivers its services. This is a matter to which
the Committee may return in the future. (Paragraph 29)
Visas
17.
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", and hope a
mutually acceptable solution can be found. (Paragraph 31)
18. 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. (Paragraph
32)
19. 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.
(Paragraph 33)
Education, research and qualifications
20. 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.
(Paragraph 36)
21. 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. (Paragraph 37)
22. 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. (Paragraph 41)
23. 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. (Paragraph 42)
24. 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. (Paragraph 44)
JETCO: progress since the Report
25. Aside
from the success on tariffs on whisky imports, recent progress
through JETCO in key areas for UK businessesfinancial,
legal, accountancy, and retail servicesappears 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. (Paragraph 50)
26. 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.
(Paragraph 51)
27. 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. (Paragraph 53)
New EU trade talks and the world trade system
28. We
give a guarded welcome to the EU-India trade talks that have begun
since the previous Report. There are clearly benefits to both
sides from a successful deal, but we would be concerned if these
talks diverted the attention of two of the biggest players at
the WTO at a crucial time for the struggling Doha Round. We call
on the Government to assess on a continuing basis the impact of
the bilateral negotiations on the critically important WTO talks,
and to perform a more detailed analysis of the potential benefits
to the UK and India from an EU-India RTA deal. (Paragraph 62)
29. Our welcome is
guarded because we see a potential danger that the EU's new bilateral
trade talks in Asia could provoke other trade partners into similar
talks. This would accelerate the growth of bilateral deals and
could cut across, confuse and ultimately undermine the multilateral
trade system, not least by reducing the time negotiators have
available to spend on the multilateral negotiations. (Paragraph
63)
Possible content of an EU-India RTA
30.
It is still hoped that the Doha Round and EU-India trade negotiations
are progressing simultaneously towards an end-2008 finish. We
recommend that any EU-India RTA deal reached before the completion
of the Doha Round should be reappraised in the light of the any
multilateral liberalisation through a Doha deal. The Government
should therefore press the European Commission to commit to a
review of any RTA that is agreed before the Doha Round is finalised,
and once that agreement has been fully fleshed out. (Paragraph
66)
Transparency and information-sharing
31. We
welcome the Government's commitment to keep business informed
about progress in the EU-India talks. We expect the Government
to keep the Committee similarly well informed of developments
in the EU-India talks, and the other bilateral negotiations underway.
In the interests of transparency, we urge the Government to make
public as much information as possible, subject to the restrictions
imposed by the sensitive nature of trade negotiations. The Government
should consider issuing position papers similar to that on the
EU's Economic Partnership Agreement negotiations in March 2005
on the EU-India RTA, the other bilateral talks, and the EU's broader
RTA strategy. (Paragraph 67)
Conclusion
32. The
UK has woken up to India, but progress must not now be slowed
in response to global concerns or expressions of doubt about India's
future. Engagement will benefit both partners. Whether or not
India grows as fast as other emerging markets, it is a country
of over a billion people, and the opportunities are huge. As Government
and business engagement continues to grow, the United Kingdom
is uniquely well placed to take advantage of those opportunities.
(Paragraph 71)
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