India Post Elections: The UK-India Business Agenda

India Post Elections: The UK-India Business Agenda

On 24th June, 2014, in the framework of FICCI’s annual delegation of senior CEOs to London, UKIBC, together with FICCI, hosted an exclusive event to discuss the business and policy environment in post-elections India, a few weeks since the victory of Prime Minister Narendra Modi.

The event took place in the exclusive Prince Phillip House in central London, where a panel of senior figures from FICCI and UK Trade & Investment, chaired by UKIBC Chair Rt. Hon Patricia Hewitt, shared their forward-looking views on the UK-India relationship and engaged in a Q&A session.

Setting the scene, Patricia Hewitt introduced the panel. Introductory addresses were then given by Dominic Jermey, Chief Executive of UKTI, and Mr Sidharth Birla, President of FICCI.

Mr Jermey spoke about the importance of the UK-India relationship: BP signed India’s largest ever FDI deal in 2001, and Vodafone is the country’s largest single investor. Meanwhile the UK attracts more Indian investment than the rest of Europe put together. He emphasized the UK and India strengths, individually, and highlighted the cultural ties which link the two nations. He defined the UK-India relationship going forward as a prosperous, progressive and an innovation-led partnership.

India finds itself at turning point, requiring infrastructure and technology, both areas where the UK can help. Meanwhile the UK hopes to attract Indian investment, talent, business, students and ideas.

Mr Birla spoke of the important changes expected to take place in India in the short term, of the great expectations placed on the new government, and the large opportunities that will be generated. The new government is already in place, but much will be revealed about their priorities and mechanisms in the upcoming Union Budget.

Panellists contributed short statements on key areas of progress and potential for cooperation, and then attendees were invited to participate in an engaging Q&A session.

Evolving Sectors 

Naina Lal Kidwani, the immediate past president of FICCI and Country Head of HSBC India, highlighted the progressive views of the new government to introduce good governance in banking. India’s new leadership understands that to achieve this, public sector banks need to be first on the to-do list.

Dr A Didar Singh provided insights into the sectors which are fast emerging and where the UK is an important investor. He highlighted defence and food processing (back end and supply chain).

On defence, Dr Singh stressed that the current system is at breaking point: India’s evolving geopolitical role can no longer be sustained by the current sector composition. Imports must shift to domestic manufacturing, hence a serious debate on FDI policies needs to take place.

As for food processing, investment in India’s supply chains and back end infrastructure needs to be high on the agenda and in fact, the UK is an important investor in this area. However, it is difficult to detach this conversation from that of FDI policy in retail, particularly multi-brand. Panellists were confident that indeed, a review will take place on this, but cautioned that it might take some time.

The same applies to infrastructure, especially in view of India’s planned economic corridors. Infrastructure development will happen, however change does not happen overnight. Delays are likely to remain an issue, particularly financing.

UK-India

Notwithstanding the highly profiled relationships and ambitions between India and China and Japan, panellists reassured attendees that the UK-India relationship remains very high on the agenda of the new government. This, despite it not making media headlines.

India recognises the UK’s longstanding position as a hub for financial and legal services and as a leading exporter of IP, innovation and know-how.

Talent mobility remains an issue, and one that is perceived as having little traction on the UK side. However, senior officials from the UKTI in India who attended the event discussed how India is the UK’s biggest visa operation overseas, and said that the UK wishes to continue to attract Indian talent and students.

Trade Policy

Contrary to views that India has an obstructionist stance on trade facilitation, the incoming government does not in fact have anything against it.

Panellists advised attendees not to jump to conclusions when it comes to India’s apparent lack of appetite for EU-India FTA. Talks are likely to see a renewed interest.

Internal dynamics

Speakers were optimistic that India will see changes in key sectors. Many of the items on the UK’s wish list, such as infrastructure development and a review of FDI policies, are in fact shared by Indian industry.

Moreover, they singled out relationships between India’s federal and state authorities as a space to watch. It is expected that movement in terms of reform will be catalysed initially at the state level.

Photos courtesy of UKIBC