4 The UK partnership with India
91. DFID notes that India is an emerging global power
and a critical partner for the UK. Its economy is the world's
eleventh largest in GDP terms and India presently accounts for
2% of global trade.[137]
Its economy is growing fast and is projected by Goldman Sachs
to overtake the UK's by 2022. The relationship between the UK
and India is multi-dimensional. While DFID has the lead in terms
of the poverty reduction agenda, policies in areas other than
aid—in diplomacy, defence, migration, trade and climate
change— are also important. As Oxfam pointed out:
Aid is not sufficient for poor countries or communities
to fight poverty and inequality—there are many other important
factors, such as reforming international trade and financial rules
to ensure that poor countries can generate and retain their own
resources—but it is necessary.[138]
92. According to the Institute of Public Policy Research
(IPPR), the UK's commitment to and delivery of international poverty
reduction objectives thus needs to be judged across a whole range
of policies including those which are outside the direct control
and remit of DFID.[139]
This chapter looks at three aspects of the wider UK-India partnership
—"beyond aid"—and at how these relate to
development goals, namely climate change, trade and investment
and education and research.
Climate change
93. As the world's fourth largest carbon emitter,
India is critical to the outcome of global climate change negotiations
and Indian energy needs have a huge impact on international energy
markets. DFID wants climate change to be a key part of its new
relationship because India has a large population (400 million)
who still do not have access to modern energy sources; it has
the second largest number of people after China who are vulnerable
to climate change; and, because it has not yet determined how
it will meet its increasing energy needs.
94. We met the new Environment Minister Jaraim Ramesh
in India. He was particularly pleased with the relationship between
India and the Coalition Government and said he had a good relationship
with the Secretary of State for Energy and Climate Change, the
Rt Hon Chris Huhne MP, and the Minister of State for the Department
of Energy and Climate Change, Greg Barker MP. Dr Price, from
Chatham House, reported that although India's priority had been
economic growth, it was increasingly recognising that it could
and should play an important role in mitigating climate change
by developing renewable energy, adopting low carbon technology
and conserving its forests.[140]
Dr Mehra told us that climate change was now being more widely
debated in Indian society.[141]
She also explained how the new Minister had begun to try to shift
the debate in India:
He started introducing the arguments that India
is a highly vulnerable country, we need to understand our degree
of vulnerability and we should also seize the future—so
recognise that carbon constraints could lead to India's underdevelopment.
We have the capacity to invest in technology now so that we emerge
as a winner in the low-carbon transition.
She said that India was not as advanced as China
in terms of thinking about investing in clean energy sources.
Nevertheless it had recently introduced policies to tax coal
and to stop subsidising kerosene.
95. The UK approach to climate change in India is
a cross-Government one. There is a Climate Change and Energy Unit
(CCEU) in India which brings together staff and resources from
the FCO, DFID, the Department for Energy and Climate Change (DECC)
and the Department for Environment, Food and Rural Affairs (DEFRA)
to lead the UK climate change strategy for India. DFID says:
CCEU leads a co-ordinated dialogue with Government
of India on the UK approach to climate change. It works with a
wide range of Indian partners including the Government of India,
business, and NGOs to deliver our joint objectives on: a credible,
fair and ambitious global agreement; rapid investment in low-carbon
growth; and increased resilience of the poor to the impact of
climate change. It also works jointly on the financial frameworks
for climate change, ensuring they are effectively coordinated
across HMG departments. The Unit's joint approach has enabled
it to factor development concerns into the full range of climate
change discussions.[142]
96. Christian Aid commented that there was little
information available about the work of the joint DFID-FCO unit
and called for greater transparency.[143]
DFID has produced a list of disparate projects under the heading
'climate change'—however it has not set out a clear strategy
or approach. Oxfam highlighted the need to develop low-cost,
low carbon energy for the poorest:
India had an estimated 400 million people without
access to electricity. On a per capita basis, the average person
in India emits about 1.2 tonnes of carbon dioxide, compared to
over 20 tonnes in the US. Therefore increasing energy use and
access are development priorities for India. But if catastrophic
climate change is to be avoided, India, and other developing economies,
will need to forge new low carbon paths to development, and as
they do so, they will incur incremental costs—for example
the higher costs of investing in a wind farm over a coal-fired
plant. These will, by definition, not be met by the private sector
without public intervention.[144]
97. The Secretary of State told us that DFID was
discussing how to use its climate finance to help the development
of green energy, especially for the poorest, in India.[145]
We are delighted that the Government intends to approach climate
change with India in a coherent, cross-Government manner. However
we would like greater clarity about the Climate Change and Energy
Unit—in particular the Government's objectives and work
plan for it, and DFID's strategy for ensuring that developmental
concerns, including helping India to develop new low carbon paths
so that it can provide affordable energy for the poorest, are
an integral part of this.
Trade and investment
98. During the past two decades India's trade has
grown twenty-fold as it has gradually reduced its restrictions
on Indian firms investing overseas. India had historically sought
to ensure its large domestic market demand was met by Indian companies
and has worried about the impact of more competitive foreign goods
on its domestic market. It now operates a more liberal trading
environment. In 2004 India ranked 20th among world exporters and
fifteenth among world importers of goods. In terms of services
it was the eighth largest exporter and the seventh largest importer.
99. DFID says:
Development is a recognised component of UK trade
policy, reflected in the work of the Department for Business Innovation
and Skills/DFID Joint Trade Policy Unit. At the beginning of 2010,
an India Trade Policy Unit (ITPU) was established, with a cross-HMG
work plan. The ITPU brings together FCO, DFID and UKTI expertise
and networks to pursue key HMG objectives such as the India-EU
Free Trade Agreement and a successful conclusion to the WTO Doha
Development Agenda.[146]
100. We met UKTI officials in Indore, Madhya Pradesh.
We were told that UKTI did not normally come to places such as
Indore since it was a second tier city. The team were based in
Mumbai and also covered Pune—both thriving cities. The UKTI
presentation, designed for UK companies, was intended to attract
investment to India, and as such presented the modern, technologically
advanced, India. This was a markedly different picture of India
from the one we saw where DFID worked. This is the reality of
India. However we were concerned that UKTI was not engaged in
cities such as Indore, which DFID was trying to help develop.
There is a need for a more coherent UK Government approach to
attracting investment to India from the UK.
101. India exports a range of products and increasingly
services. It has been able to produce generic drugs at much lower
costs than western rivals. This has significantly brought down
the cost of anti-retrovirals. For example, in the 1990s treatment
cost between US$10,000 and 15,000 per person per year. By 2001
the same treatment was available from Indian pharmaceuticals for
US$300. Now it costs just $88.[147]
102. Stop Aids campaign has expressed concerns about
one particular aspect of the India-EU Free Trade Agreement—the
inclusion of a Trade Related Intellectual Property (TRIPS) Plus
clause which it says would markedly increase the price of generic
HIV treatments. According to Stop Aids Campaign about 80% of people
on anti retroviral (ARV) treatment for HIV across Africa are taking
high quality, affordable generic drugs produced in India. India
has been able to do this by restricting the granting of patents
on new drugs to those which were distinctly new or different from
previous versions.
103. Stop Aids Campaign argues that the new EU-India
Free Trade Agreement will necessitate a change in this policy
"significantly threatening the vital supply of Indian medicines."[148]
We met with the Clinton Health Access Initiative in Delhi—a
private foundation which aims to increase the availability of
low cost quality drugs for AIDS and malaria to developing countries.
They sought to reassure us that it was highly unlikely the Free
Trade Agreement would prevent India from continuing to produce
and export low cost generic HIV drugs and pointed out that DFID
was a strong supporter of ensuring access to life saving medicines
through its "Achieving Universal Access" programme.
104. We support the expansion of trade between
India and the UK and consider that increased trade has the potential
to assist development in India. For example, India has played
an important role in the production of low cost anti-retrovirals
which have greatly assisted those suffering from HIV/AIDs in both
India and Africa. The proposed EU-India Free-Trade Agreement should
ensure that India can continue to supply essential and affordable
medicines in this way without penalty, recognising that over time
Africa is likely to develop its own capacity to do so. DFID must
champion this within the Government and the UK Government must
lobby for this within the EU. We recommend that the Government
set out its position on this issue in its response to our report.
105. DFID has a key role to play in ensuring that
UK Government policies "beyond aid" are coherent with
its poverty reduction objectives. Development will not happen
with aid alone. India is growing fast and already attracts large
amounts of inward investment. DFID must play a greater role in
encouraging UK investment in India to actively support DFID's
development objectives, especially in the poorest states.
Education cooperation
106. In India we discussed different aspects of UK-India
cooperation in education. DFID has provided support to Government
of India programmes for universal primary education and is now
considering helping with secondary education. The British Council
has projects amounting to £1.3 million for 2011-12 including
training 3,000 master trainers in English to reach 750,000 teachers.[149]
107. There are 44,000 Indian university students
currently studying in the UK. They constitute the second largest
number of international students after China. We were told that
India could not itself provide sufficient university places to
meet the growing demand for higher education but there were restrictions
on third countries opening campuses in India. However we were
told this would change once the Government of India Foreign Education
Providers Bill was passed, opening up opportunities for UK Universities.
108. The Secretary of State told us about DFID's
"research hub in Delhi, which works with the Foreign Office
and the Research Councils UK to develop research opportunities
with universities in India, and the UK, which will support development
and action on climate change".[150]
He suggested this was an evolving area of cooperation. The
Government is seeking to promote greater opportunities for cooperation
between the UK and India at higher education level. We welcome
the Government of India's Foreign Education Providers Bill, currently
before its Parliament, which will open up opportunities for UK
Universities to invest in India and help meet the growing demand
for higher education.
Policy Coherence for Development
109. On these three issues—education, climate
change and trade, which are wider than development—the UK
can have a significant and positive impact. To do so it needs
to work together with other Government departments. One World
Action said: "DFID needs to do more to work across Whitehall
to influence other Ministries to ensure that trade, investment
and security policies do not further exacerbate poverty and inequality
in India."[151]
As noted, there was no evidence that UKTI shared DFID's objectives
in relation to inward investment. Dr Eyben thought that DFID and
FCO could improve their working relationship,[152]
although on our visit we witnessed good cooperation between these
across a range of issues.
110. World Vision pointed out:
In India, more than anywhere, it is crucial that
DFID plays a full role in ensuring that the recent focus on India's
economic development is not to the detriment of the "poorest
faces of India". India is a large and diverse country with
over 1 billion people living in it; huge prosperity and high levels
of poverty live side by side and it is vital that the UK works
with the Government of India to ensure that those in poverty receive
the support they need and that the prosperity is not isolated
and brings equity.[153]
DFID has created a new Partnership Secretariat which
focuses on developing partnerships with the emerging powers on
climate change, trade and on other issues. The Coalition Government
has recognised the importance of policy coherence for development.
It is important that DFID has a strong voice in all cross-Government
debates on India and ensures that poverty reduction is a key part
of these. We recommend that the Government provide more information
on the work of the Partnership Secretariat in the its Response
to this Report.
137 Ev86 Back
138
Ev w16 Back
139
IPPR, Policy Coherence and the future of the UK's International
Development agenda, March 2010. Back
140
Gareth Price, India's Global Impact, www.chathamhouse.org, February
2011 Back
141
Q 163 Back
142
Q Back
143
Ev w3 Back
144
Ev w18 Back
145
Q 259 Back
146
Ev 92 Back
147
Gareth Price, India's Global Impact, www.chathamhouse.org, February
2011 Back
148
Ev w28 Back
149
DFID, Education Collaboration,Briefing for visit, March 2011 Back
150
Q 261 Back
151
Ev w14 Back
152
Q 167 Back
153
Ev w67 Back
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