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I am grateful for the opportunity to open this debate by raising these points. I do so not in a spirit of criticism but in the hope of making a contribution to the policy-making debate on a subject which I think is extraordinarily important to the United Kingdom.

5.43 pm

Lord Bilimoria: On the eve of India's independence over 40 years ago, Pandit Jawaharlal Nehru made a pledge in his famous speech, “Tryst with Destiny”. He said:

“A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance. The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of our generation has been to wipe every tear from every eye”.

Has Pandit Nehru's dream come true? Sadly, not yet—nowhere near it. But we know more than ever that India today, as my noble friend Lord Janvrin has said, is an emerging global economic superpower.

I congratulate my noble friend on securing this debate on such an important issue. India’s success offers opportunities to us all. I am very proud to be the chairman of the UK India Business Council whose aim is to spread the awareness of business opportunities between Britain and India, especially among the small and medium-sized enterprises in all parts of the UK, in the regions and in London. Our mission is to increase trade, business and investment between our two countries in both directions.

However, the reality is that people have been very slow to realise the renaissance that India has been undergoing. I can give you an example. Whenever I speak to business audiences around the UK, I ask how many people are doing business in or with India. In a room of, say, 200 people, I do not exaggerate when I say that only a few hands go up.

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In my own business I try to practise what I preach. In 2005, after a long break, we started manufacturing in India once again for the Indian market. After a year and a half of teething problems and settling in, we were soon producing in nine locations across India. We have an entirely Indian team operating in India, with sales increasing rapidly. For five years, India's GDP growth rate has averaged nearly 9 per cent. My own company is just one example of a growing trend and I know that there is enormous potential for partnership between the UK and India. The non-resident Indian community, the people of Indian origin in the UK, can be a real bridge between our two countries and ambassadors for both countries. The Asian population of this country makes up just 2 per cent of the population, yet contributes more than double that to the economy of this country. Where the UK and India are concerned, we are pushing at an open door. Our skills, experiences, common use of English, the rule of law, democracy and a free press all lend themselves to closer co-operation.

In November last year, I spoke at the Hindustan Times Leadership Summit in Delhi. I shared the podium with a remarkable young man, Chetan Bhagat, who, at the age of 35, has become the biggest selling author in India. In his speech, he spoke about what really matters to young Indians. He said that young Indians want politics of similarity and not the politics of difference and elitism and, above all, they want education.

There is a huge shortage of capacity and quality in education at every level in India—in higher education as well as in skills—and yet, to this day, foreign universities cannot open in the country. On the other hand, I am delighted to see that here in the UK we have numbers of Indian students increasing and record numbers coming here to study. Last year, I am proud to say that the UKIBC and the UK India Roundtable, of which I am a member, played a crucial role in ensuring that foreign students are now able to work in the UK for two years after they graduate. That will be a huge help to foreign students, particularly those from India. Our universities are fantastic. We punch above our weight continually: four out of the top 10 universities in the world are British. The number of Indian students now has increased five-fold to 25,000.

People are still not waking up to the India story. In 2006, Larry Summers, who at that time was president of Harvard and is currently the director of the White House National Economic Council, opened up the Harvard Business School research centre in India. He said that if, in 1991, when he was the chief economist at the World Bank, he had said that in 15 years’ time India, which at that time was nearly bankrupt, would have foreign exchange reserves of nearly $200 billion, he would have been called insane; and if he had predicted that a country that was nearly bankrupt would be growing at 9 per cent a year, he would have been called mad. That is the reality of India.

In 2007, when the UK India Business Council held an event, Jim O’Neill, the chief economist of Goldman Sachs and an advisory board member of the UK India Business Council, gave an update on the famous BRIC report on the rise of Brazil, Russia, India and China.

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He said that when it was first published in 2003, it was criticised for being too optimistic as regards India, but when he gave his update he said that in 2003 Goldman Sachs was not even looking at India as a country until the BRIC report. It revised its forecast and has now predicted that India and China could be two of the largest economies in the world by 2050. While the western world is in recession, the Indian economy is expected to grow at around 6.7 per cent, which is fantastic. The Indian middle class is growing very rapidly. It is already estimated at over 200 million and is projected to grow to over 500 million in the next 15 years. That is amazing. India saves 35 per cent and has woken up to the world.

Today, we had a meeting with the Confederation of Indian Industry. It confirmed that today, more than ever, India is looking west. Having chaired the Indo-British Partnership for six years and the UKIBC, I have seen this Government’s support for doing business in India go from zero to the £1 million a year we receive from UK Trade & Investment, which is fantastic. We are now generating our own income as well. It shows what a difference £1 million can make to the bigger picture. It is an example of public/private partnership at its best because we work closely with UK Trade & Investment, the British High Commission in India and the Indian High Commission over here.

We are seeing Indian investment here increase by leaps and bounds with Tata acquiring Corus and Jaguar Land Rover, hundreds of Indian companies investing in the UK, and trade between our two countries increasing rapidly with £10 billion of goods and services both ways. However, I still believe we are scratching the surface. Vodaphone’s purchase of Hutch in India has been an enormous success. In a short while, it set itself the target of 100 million users in India by 2010. It has already reached 74.1 million users.

Quantum leaps are being made. I always tell small businesses to go out to India and have a look for themselves. In 2004, there were 19 direct flights between the UK and India and two airlines to choose from. Today, there are more than 119 flights. British Airways alone has 43 flights per week to Delhi, Mumbai, Bangalore, Chennai and Kolkata, with flights to Hyderabad being added. However, there is so much more we need to do. The UKIBC recently released a report on emerging cities in India. They are cities we do not hear about over here, but they have enormous potential for British business—and for SMEs in particular.

We have all been lucky recently to witness one of the greatest spectacles in the history of democracy: a country of 1.1 billion people voting in five phases over nearly four weeks with nearly 60 per cent of the population casting their votes. Regardless of which party they voted for, each vote represented democracy, justice, empowerment and the right to be heard, and the winner with the clearest margin was democracy. With a leader like Dr Manmohan Singh at the helm, we can expect greater reforms in every area, economic liberalisation and the opening up of pathways to and from the country. However, we must respond with openness, and we are continually criticised by Indian business about visas, which I find very embarrassing.

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I conclude by imagining India and Britain as two great rainbow nations in every way, and a rainbow stretching between the UK and India. The normal story goes that there is a pot of gold at the end of the rainbow, but there is a pot of gold at both ends of this rainbow.

5.53 pm

Baroness Coussins: I, too, am grateful to my noble friend Lord Janvrin for securing this debate. First, I put on record my thanks to the Industry and Parliament Trust for organising the delegation to India last March, of which I was fortunate to be part. Although it was my first visit to India, the advance briefing sessions organised by the IPT were detailed and wide-ranging and were reinforced by helpful sessions in Mumbai by UKTI and the British Council.

I wanted to go to Mumbai and Chennai to see what I could learn about how Indian businesses are responding to the challenge of corporate responsibility and sustainability issues, in which I have a special interest. My remarks on this topic will pick up from where my noble friend Lord Janvrin left off. I am also interested in the value placed by employers on language skills in the workforce and the impact of that on economic success. Finally, I wanted to learn something about the place and role of women in the labour market. On all three counts, I learnt a great deal, and I believe that British business could also learn a great deal and benefit from the closer economic ties with India that more relaxed regulation should encourage.

In the UK, my professional work is advising businesses on corporate responsibility, but I should perhaps declare here for the avoidance of doubt that I have never worked in any paid or unpaid capacity for any of the companies that we visited in India, or those whose names I shall mention today. I am aware that, in some cases, companies in the UK are still at the stage of needing to have the basic business case for social responsibility spelled out to them. In India, there seems to be a different, much more open and positive, mindset about this issue that UK companies looking to take advantage of business opportunities in India should appreciate.

We should not, of course, underestimate the different social backdrop against which these comparisons are made: the grinding poverty of India is overwhelming and 240 million people live on less than a dollar a day. Only 3 per cent of the workforce pays taxes, the remainder being in the so-called informal sector. Basic infrastructure like road building, rubbish clearance and public transport are desperately inadequate, and the culture of corruption is still rife across much of commercial and public life. However, perhaps because of all these things rather than despite them, leading-edge companies in India have understood and mainstreamed their corporate responsibility programmes in an impressive way. This goes both for Indian companies like the Supreme Group, Tata or the Bollywood studios, as well as for the vast big-name multinationals operating in India, such as BAe Systems, HSBC, Shell, Cadbury or KPMG. Of course, there is Hindustan Unilever, which my noble friend Lord Janvrin also mentioned, which, although part of Unilever's global operations,

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is uniquely permitted by the company to have its geographical designation of Hindustan in front of the word Unilever in recognition of its groundbreaking corporate history in India.

I have time only to mention briefly a few examples of what some of these companies are doing, but the best place to start is to quote Jamshetji Tata, the founder of the Tata Group, who said as long ago as 1904:

“In a free enterprise, the community is not just another stakeholder in the business, but is in fact the very purpose of its existence”.

This is a good summary of the philosophical case for embracing corporate social responsibility. The community comprises your future consumer base, future workforce, future investors and future shareholders, so it is nothing more nor less than enlightened self-interest which should drive responsible business practice in the interests both of commercial success and social benefits.

In Tata's case, it has identified the opportunities offered by the growth of the so-called second-tier cities in India as a focus for backing a massive road-building programme, which, together with their new environmentally friendly Nano cars, will offer new routes to market for millions of rural producers. Prospective UK investors and businesses would also do well to look at the second-tier cities and not just target the obvious places like Mumbai, Chennai, Delhi and Bangalore.

I will also mention the work that we heard about at HSBC in Mumbai, which sets a genuinely global standard in understanding what corporate sustainability is all about. Through partnerships with NGOs, its programme empowers rural women with economic and educational skills and experience. This results in possibly the only real example of the achievement of social mobility we saw and, of course, helps to provide HSBC with a broader base of customers and workforce for the future.

An excellent example of corporate social responsibility delivering a win-win situation in both India and the UK is the manufacture of sustainable packaging by the Supreme Group. Accredited by the Fairtrade Foundation, Supreme's eco-friendly and ethically manufactured bags not only provide much employment in state-of-the-art factories in south India, they provide the bags for several UK supermarket chains including Tesco, Sainsbury and the Co-op, which helps these companies meet their own environmental targets—and the rest of us to use less plastic.

I also want to mention the concept of social enterprise, and one particular example in Mumbai which demonstrates brilliantly what can be achieved by an ambitious young individual trained in business and economics who wanted to put her skills to use by meeting a social need through the medium of business. This was a young woman who established a company called Dial 1298, which is Mumbai's—and probably the world’s—first sustainable ambulance service. Mumbai did not have an ambulance service that served the whole population, free and on the basis of need. Sweta Mangal decided to set one up, which would sustain itself by charging people who wanted to be taken to private hospitals, so that a free service could be provided

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to everyone else. The company now attracts independent investment, and receives technical advice from the London Ambulance Service, which Sweta Mangal had come across herself when she was a postgraduate student at the LSE. The company is seeking further investors and partner organisations so that it can roll out the 1298 service in eight more Indian cities and the entire state of Kerala over the next five years. I ask the Government to ensure that opportunities to engage with social enterprise in India are drawn to the attention of UK businesses in the same way as more traditional, profit-making commercial opportunities are.

Sweta Mangal's postgraduate study outside India is a typical story, which is also relevant to why India's economy is so healthy. Well-educated Indian graduates are hungry for experience and opportunities and their confidence, ambition and willingness to take risks is an attitude the UK could learn from. In a global market, and with multilingual skills as well as top-notch scientific credentials, Indian graduates are in a position to exercise a significant competitive edge over UK graduates in the jobs market. I hope that the Government will do more to encourage UK graduates to seek post-graduate and work experience in India, in order to broaden their horizons and enhance their competitive position.

I read an article in the Hindu newspaper while I was there that seemed to sum up the attitude I was talking about. It was about how teachers at a Chennai training centre, which offers courses in 26 languages, were reporting a surprising new demand for learning Swedish. This turned out to be because Sweden had recently relaxed its visa requirements, which in turn had opened up educational opportunities for Indian students, who were seizing them with great alacrity and making sure they learnt Swedish first. India expects to be the world's second largest economy by 2050. Despite the obstacles of scale, India has lessons to teach the UK and business opportunities to offer, both here and there. I look forward to hearing from the Minister how the Government intend to make sure the UK learns from, contributes to and benefits from India's economic success.

6.02 pm

Lord Dholakia: First, I take this opportunity to thank the noble Lord, Lord Janvrin, for this important debate. The noble Lord could not have chosen a better time because a number of key events have taken place over the past few weeks both here and in India.

First, we had the general election—a point well made by the noble Lords, Lord Bilimoria and Lord Janvrin, in the world's largest democracy of 1,000 million people. The sheer scale of the operation beggars belief. Over 650 million voters went to the polls over a few weeks to elect a new Government. That is twice the number of electors in the whole of the European Community. It was almost a faultless performance with the use of electronic computerised voting machines. Unlike Iran and Zimbabwe, there were no allegations of vote rigging. The most important part of the process was that a substantial number of voters participated. That puts our European elections to shame when the mother of democracy cannot get even half her electors to the polls. The results demonstrated a strong Congress

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Government. Communal politics have been cast aside and the fundamentalist parties could not dent the desire of Indians to have a secular country. Look around the subcontinent; while the rest of the neighbours are faltering to maintain the semblance of a democracy, India has emerged as one of the most important, mature democracies in the world.

Secondly, I draw attention to the meeting held between the Federation of Indian Chambers of Commerce and Industry and the Indo-British All-Party Parliamentary Group on 9 June 2009 at the House of Lords. We were delighted to welcome Dr Amit Mitra the chief executive of FICCI and its director Harsh Pati Singhania. The meeting featured the former President of India, Dr APJ Abdul Kalam, who spoke about the global sharing of knowledge and resources to improve development. The dialogue between the two groups revealed the extent of the opportunities and the enthusiasm on the part of Indian businesses to interact and forge relationships with UK business. That has been achieved to some extent with big business and large corporations. However, it was revealed that the UK's reception of Indian business teams is the weakest in Europe. France, for example, hosted bilateral trade talks with Indian and French businesses, with over 200 French corporations represented. The UK is also under-utilising its small and medium enterprises in its trade relations with India.

FICCI noted specifically that it has a dynamic and growing corporate sector, which is interested in working with UK SMEs. Unfortunately, all requests to the UK Government and business organisations have received little or no response, other than some of the initiatives taken by the noble Lord, Lord Bilimoria, and others. I hope that the Minister will have some comment to make on that point.

While UK regional development authorities, such as the UK India Business Council and the CBI, work on SME-related issues, they are all disjointed and work on piecemeal projects. As a result, no one knows what is happening on a regional or even a countrywide basis. The main deficiency is the absence of a single co-ordinating body that is able to mobilise a quality, robust SME group that could engage in large-scale business-to-business meetings. FICCI, for example, has been doing this with all other European communities, such as France, Italy, Germany, the Netherlands and Spain. Why not the United Kingdom?

This is a longstanding problem. There is an urgent need to have a co-ordinated effort from the UK to get Indian SMEs and their UK counterparts to engage in an exchange of bilateral trade. We are looking for the Government to take some kind of leadership role and harness the UK's SMEs. The advantages of this approach are two-fold. It will generate enormous growth in entrepreneurial activity, which is one of the most important forms of economic growth in the recession. With ordinary avenues of employment shut down, many highly skilled individuals are unemployed. Their skills need to be harnessed and the self-starters encouraged in engaging in creative, innovative work. Secondly, it is highly advantageous for the long-term eradication of poverty in countries such as India, where entrepreneurship is often the only way out of poverty.

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However, it is also important that people who become wealthy, who are able to generate large sums of money, do not take a top-down approach. The development of the country as a whole needs to be linked to the increase in high-net worth individuals so that the generation of wealth does not create a country of rich and poor but rather a healthy economy which helps to alleviate the dire poverty which affects all of them. According to the World Bank, small and medium enterprises are essential for dynamic economic growth and job creation. The sector in India has been hit hard by the current downturn with credit growth slowing and demand falling in both domestic and export markets. Improving access to finance for this sector is the key to long-term development. This cannot be achieved without robust attention to the role of women in the formal and informal sectors. Hard work alone is not enough to promote economic mobility. Organized dialogue in all sectors and also across urban and rural areas between India and the UK is the key to achieving millennium development goal number one: the eradication of poverty.

India is often criticised for its government, particularly in relation to its bureaucracy. It is said that Britain invented bureaucracy and that India perfected it in triplicate. However, let us remember that there are more than 1 million self-help groups, many supported by NGOs, which are creating a grassroots revolution. The magnitude of this invisible groundswell is much larger than Grameen Bank. The positive side of the Indian economy is its strong financial institutions. There is a great challenge ahead: the demographic dividend can be prevented from becoming a demographic deficit. We salute the major conglomerates like Tata and others, which have shown what can be done in their contribution to India’s economy. They may not feature in a list of the world’s richest millionaires, but their contribution to alleviating poverty and promoting educational programmes is second to none.

I am delighted that the Minister is responding to this debate. I do not wish to make him uncomfortable, but I will pose questions. Why is there not an exemption from social security contributions for Indian professionals on short-duration visits from India? They pay social security contributions despite no social security benefits being available to them. If Belgium, France and Germany can do this, why can the United Kingdom not do it? Bilateral trade is also impacted by our visa regime. I do not criticise the points system, but repeated attention is drawn to the difficulties of obtaining a visa. We are not talking about immigration, but we should make sure that business visitors and senior providers are facilitated to travel to the UK to explore business opportunities and business contracts. Will the Minister not accept that timelines are short in the business world? We need clarity, uniformity and transparency in visa and work permit procedures. An example is the IT industry. It is particularly impacted by issues such as delivery of service, which is dependent on movement of professionals at short notice.

Medical tourism requires examination. There are difficulties with insurance portability and the three-hour flying rule that preclude UK patients getting treatment in India. Should we not look at regulatory changes

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here? Then there is the classification of Indian products. A case in point is the Indian whisky made not of malt but of molasses. It cannot be sold as whisky here, so now the British Government term it rum. Something must be fundamentally wrong. I do not wish to undermine the quality of Scotch, but India consumes a substantial amount of Black Label, yet it cannot reciprocate by selling its own product in the United Kingdom.

I welcome Patricia Hewitt's appointment as chair of the UK India Business Council. More than that, I welcome the valuable work that has been undertaken by our own Industry and Parliament Trust and the work of Sally Muggeridge.

Finally, in the 17th century, Britain entered into trade with India in the name of the British East India Company. That was 250 years ago and provided us with 250 years of British rule. I promise one thing: Indians are not here to establish Indian rule or an Indian Raj, but they can surely show a way out of the dire economic predicament in which we find ourselves.

6.13 pm

Lord Howard of Rising: The noble Lord, Lord Janvrin, is to be congratulated on introducing this debate and drawing attention to the outstanding opportunities for investment and trade between the United Kingdom and India, to which many of your Lordships have referred.

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