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First Annual UK/India Investment Summit

The Rt. Hon. Alistair Darling MP,  Former Secretary of State for Trade and Industry
Lancaster House, London,  10 October 2006

Minister Nath, Lord Bilimoria, Ladies and Gentlemen.

It is a pleasure to be here at the first India/UK Investment Summit and it is good to see so many people from industry today, both from the UK and from India.

During the course of today’s meeting, you will hear much about why our bilateral trading relationship is so important. And you will also hear about our commitment to strengthening that relationship even further.

The theme for today’s event is “Global Partners: Shared Vision”. Globalisation is a fact of life. We are seeing a rapid economic expansion on an unprecedented scale. It is happening and it won’t go away. Some see it as a threat – something to protect themselves from. Others feel a sense of insecurity and worry about what it will mean for them.

But this global expansion brings massive opportunity – to those willing to seize it. And we can make that a reality for business and our people.

The UK and India have had a long special relationship. We value this. We have close, political ties. Our cultural links are strong. Our economic history goes back centuries.

Our economies make us natural trading partners. We depend on trade which is why we must embrace it. That’s why globalisation of markets is so important.

Our annual trade with India is growing at about 30%.

Last year Indian foreign direct investment into the UK more than doubled. Companies such as the Tata Group, (one of India’s largest companies specialised in IT, eginerring, energy, chemicals), ICICI Bank (India’s largest private bank) and Infosys (global leader in IT and Business Consulting Services) all have a bases in the UK. In addition, their UK operations are acting as the gateway to their growing activity in the rest of Europe.

The UK is the third biggest investor in India. And measured by the number of projects, India was the third biggest investor in the UK last year.

As a result of UK firms taking up the opportunities that trading with India offers, we are seeing an ever-increasing growth in the value of that trade to both our economies.

Last year, for example, the value of bilateral trade between the UK and India in goods and services was £7.9 billion: this represents an increase of nearly 23% from the previous year.

This growth will continue, provided that the liberalisation and opening of the Indian economy continues – and that is important to us both.

Fifteen years of economic reform has placed India firmly on the path to economic superpower status.

With growth rates that exceed 7% year on year, India is the world’s second fastest growing economy – the Government of India is aiming for growth of about 10% per year.

Here in Britain, we are now the leading country as a destination for Foreign Direct Investment globally. We are thought of as a good place to do business

And for the fourteenth year running, London has been ranked as the best city in Europe in which to do business.

That is a tribute to some of the most business-friendly regulatory and taxation regimes in the world.

So it is clear that both of our economies are in good health. It is also clear that the trading relationship between the UK and India is thriving.

And it could be stronger still. Both Government and business are committed to that.

So we need to do more, both as government and in the private sector, to increase trade and raise it from 1% of the UK’s global trade.

Government is playing its part.

The UK Trade and Investment operation in India, already the second largest globally, will increase in the next couple of years.

It continues to support the Indo-British Partnership Network.

The Indo-British Partnership Network has become one of the main organisations used to tell UK companies of the many opportunities that exist for them in India.

It also identifies and helps to remove many of the barriers to trade that still prevent UK firms from taking advantage of India’s emergence as a true global economic trading partner.

I am told that, just yesterday, the Confederation of Indian Industries (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) announced their intention to work together to duplicate the UK model of the IBPN, in India. This is welcome news indeed.

Jointly, the governments of Britain and India are engaged at the highest level on strengthening our commercial ties – the Joint Economic Trade Committee (JETCO) is helping to identify and remove barriers to trade between our two countries.

Already we have seen the results of this work. For example, Air Services between the UK and India have quadrupled in the last three years. JETCO was directly involved in making that happen.

When I visit India in the early part of next year, I will discuss with Kamal Nath how we can further use the JETCO to eliminate the remaining barriers to trade between our countries.

I firmly believe that if we can create the right trading environment, then the potential for trade between Britain and India will be immense. But opening up travel and removing barriers to it are essential if we are going to see continued growth.

Business between our two countries is also moving into new areas such as energy renewal, biotechnology and life sciences.

These are the areas where our creative and innovative strengths will maintain the competitiveness of our economy in the future.

And of course, we should remember that outward investment is a two-way street. Indian companies are investing in the UK in ever increasing numbers. Currently, there are more than 500 Indian companies with a base in the UK.
And those Indian firms that are already here are in high-growth sectors, where UK expertise is able to add real value.

About 60% of Indian firms based in the UK operate in the IT sector.

All this is helping us is to raise the competitiveness of the UK economy and move individual businesses up the value chain. It is also why today, as we speak, one in four British jobs is linked to business overseas.

And that’s why embracing the challenges of the global economy is so important. So it is essential that both our countries continue to play their part in the rapid global economic expansion we see today.

Many of the industries in which Britain leads the world, such as Financial and Legal Services and Retail want to do more business in India.

Opening markets up fully will result in a huge benefit to both our economies.

For example, I am told that the accountancy system in India is under such pressure that there may soon not be enough professionals to service domestic demand.

By opening up that sector, foreign firms will be able to compete and offer a real choice for Indian companies and individuals. Britain leads the world in accountancy services.

By opening up the retail sector, UK expertise could help to develop effective storage and distribution systems that would be of real benefit to Indian Agribusiness.

A fully open economy can only help India to take its place as a true global economic superpower.

But the governments of Britain and India alone cannot create the global trading environment we want to see.

In the next few months the current WTO talks will reach a critical phase that could shape world trade and, therefore, development and growth for the next few decades.

Britain will do all that we can to encourage a positive outcome. India too has a central role to play.

Globalisation is, and has to be, not a threat but an opportunity to us all. And to respond to this huge change by resorting to protectionism will inevitably lead to less trade, lower growth, and therefore lower employment. That’s a real threat to business and to us all as individuals.

We have a choice. To run away from what is happening, to erect barriers in an attempt to shield ourselves from change. Or embrace change.

As politicians and businesses we have an opportunity to show how economic expansion can bring new jobs and increasing opportunities and prosperity for all our people.

In short, if we make the right choices, globalisation can benefit everyone.

We need to show to a sometimes insecure and sceptical people that, provided we make the right decisions, the change we see all around us will be a force for good.

Yes, there will be change. There always has been. But new jobs come from increased trade and greater movement of goods and services.

This results in lower prices for goods in our shops, higher economic growth and, ultimately, higher employment.

For the majority of companies here today, India, along with the other emerging economies is where the business will be won, now and in the future.

India offers that invaluable challenge to UK companies. But it also offers many opportunities – some of which are unmatched by any other country in the world.

So we should take this opportunity to strengthen our joint commitment to work together as two of the leading, dynamic, economies of the twenty first century.

Thank you.