Practical steps towards improving Britain’s economic relationship with India
WHEN it comes to bilateral relations with the BRICs, one country where the UK should have an edge on its rivals is India. Not only do we both share a love for cricket – unlike the US and the vast majority of the EU – but Britain is also home to a vibrant Indian community that plays a huge role in London and beyond. Of course, this shared culture and history is not in itself a basis for doing business, but it is a good starting point.
So as the Prime Minister heads for India this week – building on the momentum of the mayor’s visit last November – it is positive that he has partly addressed concerns about visa rules deterring international students coming to the UK.
There are 40,000 Indian students in the UK who make a valuable contribution to the economy. We also welcome a large number of Indian tourists and business travellers, who have an important economic footprint. Tackling the perception that our visa system places onerous restrictions on Indian visitors is inextricably linked to bosting trade and investment.
It should not be forgotten that this is a two-way process. More Indian investment comes to the UK than to the whole of the rest of the EU, while TATA is the largest manufacturing employer in the UK, with 47,000 employees. This investment will ebb away if the UK business environment is not seen to be welcoming enough.
That is particularly important because India – like the UK – is currently seeking long-term solutions for infrastructure financing. At a recent conference we hosted on this subject, a huge range of opportunities for City firms were outlined, ranging from ports to power generation and rail to roads.
As part of its current five year plan, India projects a need for investment of $1 trillion (£631bn) in infrastructure – with 50 per cent coming from the private sector across the supply and financing chain. International investors need a stable and transparent environment – a point I will be making when visiting India in April.
Recent moves to liberalise foreign direct investment rules, and to increase the investments that foreign institutional investors can make, were a step in the right direction. We hope to see progress on the long-awaited Insurance Bill soon.
India’s Banking Amendment Bill could build on recent progress by bringing legislation up-to-date. We also hope to see progress towards a level playing field for foreign banks in India – as enjoyed by the growing number of Indian banks in the UK. This in turn will help to bring greater funding to Indian companies in need of capital.
The history of India and the UK are inextricably linked. But in order for us to have a shared future, policymakers in both countries need to take practical steps to create a more welcoming environment.
Mark Boleat is policy chairman of Canada Corporation.