British firms must have more belly to get involved with Delhi
Britain must look to revitalise its ties with India. Breaking down barriers for exporters is one of the most important challenges for those concerned with our stagnant economy
Indian growth has slowed in the last financial year and many are expressing disappointment with the projected figure for the 2012 financial year – 6.9 percent. Yes, that’s right; disappointing growth of 6.9 percent.
The President, Pratibha Patil, recently assured Parliament that the centre-left government dominated by her Indian National Congress will take the necessary measures to restore the growth rates of eight-nine percent enjoyed in recent years.
India represents “a missed opportunity” according to the Business Secretary Vince Cable, speaking last Thursday at the UK-India Business Council Annual Summit in Manchester. That the UK trades more with Sweden and Ireland than India betrays the optimism seen in the country by new Prime Minister David Cameron in July 2010 as he made the country his first state visit since taking office.
Then, the PM called for a ‘new special relationship’ with the emerging economic powerhouse. It is certainly these types of relationships that need to be forged by the Coalition government; for all the pre-election lip service paid by President Obama to our unique camaraderie with America, the increasingly certain prospect of four more years of the most anti-British President of recent times are likely to see the White House revert to looking to President Hollande and other ‘new’ relationships as it has focused on in its first administration.
The politics aside, getting British firms in India is an economic imperative. As Jo Johnson MP stated in the Centre for Policy Studies’ publication ‘Growth, Growth, Growth’, booming India represents a huge opportunity but not always in areas where our competitive advantage is obvious.
With machinery, vehicles and other manufactured goods accounting for almost 80 percent of the EU27’s exports to India, countries like Germany have capitalised on their advantage in these sectors and outperformed the UK.
Whilst trade between the UK and India was at £13bn in 2010/11 – a 40 percent increase over 12 months – our share of India’s trade has actually dropped and we lie behind Singapore, Belgium and Iran: special relationship indeed.
To revitalise Britain’s ties with India, Johnson sets out six key policies:
1. Push the EU to finalise the long-awaited FTA with India, encouraging liberalisation of key sectors such as retail and financial services.
2. Reform of the Export Credits Guarantee Department to ensure businesses rise to the challenge of exporting to more ‘difficult’ countries
3. Overhaul connectivity, such as increased air capacity.
4. Move away from the donor-recipient aid relationship, instead partnering with India on aid projects elsewhere.
5. Embrace global talent, not repulse it.
6. Have more confidence in what British institutions can bring to India – particularly in weeding out corruption.
Still, the UKIBC conference demonstrated that there are numerous success stories. India’s digital innovation sector is experiencing huge growth (as high as 23 percent for the internet-based economy) and BT has been there since 1995.
India’s ‘demographic dividend’ presents huge opportunities in education, skills and training and British companies like Pearson have brought their considerable knowledge to the table. The country is also looking to secure more than $1trn of infrastructure investment and UK companies such as architects Benoy and equipment manufacturers JCB have been quick to take advantage of past opportunities. Standard Chartered bank, now primarily focused on international business, sees India as one of its most important markets.
The key to Britain’s business future in India lies in getting more of our small-and-medium enterprises (SMEs) venturing along with the big boys. As the CPS has said, breaking down barriers for exporters is one of the most important challenges for those concerned with our own stagnant economy. It’s vital that policymakers are aware that government intervention can be the problem as well as the solution.
We can be sure that if our SMEs build on the experience and advice of those with success in the now ‘emerged’ markets such as India, there will be many more examples to champion and a positive outcome for the UK economy.
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