Mike Connor took over as British Deputy High Commissioner in Chennai on August 8, 2005. Earlier, he was on secondment from the Foreign and Commonwealth Office to the UK Department of Trade and Industry as Head of the South Asia Unit. In this role, he had a special interest in India, particularly on issues of trade and investment. He was closely involved in the conceptualisation and design of the Joint Economic and Trade Committee (JETCO), often as part of bilateral Ministerial discussion on the themes of liberalisation and trade tariffs. Mike Connor, British Deputy High Commissioner
in southern India, recently spoke about the emerging opportunities for economic partnership between India and the United Kingdom. Excerpts from his speech:
I have been working with and in India for the whole of this century. I was for five years the head of the department in London dealing with trade and investment in South Asia. As a result I was able to visit India 3 or 4 times a year. And since 2005 I have had the privilege of being the British Deputy High Commissioner to South India living here in Chennai.
It is very easy to be overawed by India''s sheer size and diversity - a continent more than a country. In my brief time in South India I''ve realised how true this is. Chennai is as far from Delhi as London is from Bucharest. If South India were a country by itself, with around 223 million people, it would be the fourth largest in the world; just behind the US and ahead of Indonesia.
The sheer scale, breadth and complexity of our relationship makes it unique. Our new Foreign Minister, David Miliband, recently said that he made it a point when he was first Minister for Schools and later as Minister for the Environment to visit India. He visited because he believed that politicians of his generation who did not understand how the world looked through Indian eyes were not going to understand the world very well.
We are ideal partners in more ways than one. Indians are among the most visible, successful communities in the UK. The British-Indian community represents 2% of our population but contributes some 4% to our GDP. These are British citizens but they are also Indians. And what we are seeing now is their companies investing in India from the UK.
Lord Swraj Paul will be in Chennai soon for the inauguration of Caparo facility. Rs 600 crore is being invested here in the first two phases, with even more to come. My good friend Lord Karan Bilimoria, who is the British Chair of the Indo-British Partnership Network, is investing heavily here in India. There are many more examples of UK investment across India.
But the relationship goes deeper than this. We have a great deal in common -- democracy and freedom of expression, language, business culture, legal, banking, financial structures, passion for curries, madness about cricket. (The Indian cricket establishment clearly has more control over the weather in the UK than English cricket). And our national dish is no longer fish and chips, but chicken tikha masala
And we share a proud, vibrant and secular democratic tradition. Our partnership is very strong and expanding on several fronts - political, counter-terrorism, education and training, climate-change, development, economic and trade.
But rather like my school reports used to say: “Could do better”. There is so much more that we can do together that we cannot afford to be complacent about our relationship. India''s population is very young; 50% (or 550 million) are under 25 years of age! They are ambitious and keen to see India take a leading role in the world. Economic partnership
The challenges before India have been debated at length. Debates typically compare India with China, consider India''s unused foreign exchange reserves, its infrastructure bottlenecks, dependence on oil imports, WTO commitments and so on. They also discuss relatively slow agricultural growth, a growing tendeely on the services sector, growing rural-urban migration, increasing income disparities between performing and non-performing states, and barriers to FDI. As I say, well debated. I will not therefore, go over these debates!
But for those of you who want to have an interesting perspective on this debate I suggest you read Edward Luce''s book "In spite of the gods"
. His analysis on some of these issues is revealing and I suspect a lot of what he has to say is not news to you. So the real challenge, it seems to me, is in discovering where the opportunities are - for India, for its partners - and in converting these into drivers of equitable and sustainable growth. I will focus on a key element of this partnership. I will place before you what I believe are some opportunities for our economic partnership.
Trade and investment
First, a bit of perspective. How strong really is our trade and investment partnership? Consider this:
In October 2000, when I was on my first visit to India, I was asked by a then Indian minister why more British companies were not investing in India. The answer then was simple: British companies were amongst the most active overseas investors in the world. But it was easier and more profitable for them to invest elsewhere than it was in India. In short, the risk return ratio was out of kilter.
And despite this, the UK has remained the third largest investor in India over the last fifteen years - second if you discount Mauritius! And an increasing number of British investors are coming to South India. I have already mentioned Caparo’s investment plans. Laird, once a famous shipbuilding company, has transformed into a high-tech company and is manufacturing components for Nokia in Chennai. Hampson in Bangalore are manufacturing high-end components for the automotive and aerospace industries. Others, which I cannot yet name, have very serious plans to invest here.
There are still problems for UK companies. The UK is now predominantly a service economy. This is reflected in UK investments in India: HSBC, Standard Chartered Bank, insurance companies, software companies etc.
But it is these very sectors where the UK is strong that India has blocks or caps on FDI. Let me take a few examples: Financial services
London is one of the most successful financial centres in the world, if not the most successful. And the city recognises the importance of India to its future.
To mark this fact, a few weeks ago, the Lord Mayor of the City of London formally opened a new city office in Mumbai to help UK-based financial services companies to establish themselves in India and make the most of the many opportunities that the market has to offer. It will also encourage Indian firms to establish (or indeed expand) their operations in London.
In February 2007, the City of London Advisory Council for India - all very senior Indian business figures - established three priorities for this work:
The development of the public/private partnership (PPP) model for infrastructure development.
Improving access to capital
The development of the corporate debt/bond market - on which the City of London is undertaking research for publication later this year.
This is a real opportunity to take partnership to the next level and I do hope companies in India and the UK make full use of this new Office. But there is still a limitation on the access that major British financial organisations have to the Indian market:
In the insurance sector, Lloyd’s of London is one of the largest and most successful insurance markets in the world, but is currently prevented from operating in India.
Foreign joint venture partners are limited to 26% in their shareholding. Ironically this industry needs more capital in order to diversify its services. And it is the foreign shareholders that can bring that capital. India has undertaken to raise the FDI limit in insurance