Category Archives: Trade & Investment

Feed the woorrlddd – let them know its Christmas time…

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Remember those words? Remember Bob Geldof on TV during Live Aid launching into a tirade asking people to call in to pledge money for the people of Ethiopia? Well, guess what?

I’m on my way to Addis for the Africa Summit of the World Economic Forum, which last year was held in Cape Town – in Africa’s largest economy – South Africa. So, when they announced that this year it’d be in Ethiopia, I, and many others, looked a little puzzled – about their choice.

Since then, I’ve paid attention to everything “African” and am actually looking forward to attending, knowing that Ethiopia is one of world’s fastest growing economies – YES, you read correctly – Ethiopia’s BOOMING – who would have thought!!

Take a look at this BBC report if you want to learn more: http://www.bbc.co.uk/news/world-africa-15739706

I’m going to be live tweeting from Addis, so please do follow me on Twitter if you want to know what’s being said.

World Economic Forum – India derailed.

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Such is the faith of people in India that problems, challenges, opportunities, and any successes are often attributed to a divine force – the almighty. I remember a raging argument with my mother when I was a child, in which she basically justified her in-action by citing the same – “if it’s meant to be…”, which I’ve always seen as a cop-out as she avoided taking responsibility for an action.

Well, the reason I mention this is that having participated in the World Economic Forum’s India Summit in Mumbai earlier this week, India’s political & business leadership reminded me of the raging argument between my mother and me. Just that in this case, India’s much celebrated captains of industry became my mum for two days.

The problem is that everyone now recognises that the challenges India faces are possibly too big to overcome. The shine has truly come off. The penny’s dropped and they don’t know what to do. So they’re happy just to bumble on and see what happens (if it’s meant to be…)

Such was the elation of the mid 2000’s, that she was pleased to have been invited to the G20, and other international platforms, it seems that they’ve forgotten that if they desire global recognition, they need to offer solutions that fix problems.

Take, for example, the construction industry which itself will see an investment of a trillion dollars over the next ten years, but where are the skilled tradesman? In a similar fashion, take any profession and you arrive at the same problem.

India’s much talked of demographic dividend stands to turn into the exact opposite if practical solutions are not found. It’s far too easy to say that the private sector needs to play a role by harnessing the opportunity. India’s government needs to follow through by creating a favourable policy environment, else… the risks to her growth are simply too significant to consider.

I’m quite a positive guy, but this Summit knocked the stuffing out of me.

Corruption, a bloated bureaucracy, a ego, all stand in the path of progress. That’s what the India Summit confirmed in my mind.

There’s hope for India, after all the Chinese are humans

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Having just returned from the World Economic Forum in China, I’m filled with optimism and hope for India’s prospects. Let me explain:

For quite some time, there’s a line that’s been pushed through the media of the Chinese being super-human, super efficient, and all such super things. My visit last year to China confirmed this, but on reflection I feel I was awe-struck just to be visiting China – its hard not to be considering all the hype you hear about the economic juggernaut that’s going to increasingly shape all our futures.

Having taken the opportunity to scratch beneath the surface this time, I found that in many respects the Chinese are no different to my Indian brothers and sisters, it’s just that the state does a good job in presenting a different picture – one of an organised system and collective entity – which is certainly not the case.

In fact, witnessing and experiencing such difference, almost makes me like China more, it makes the place more humane, and for this reason more attractive as a place to visit and perhaps even invest in.

In India, the one thing we all know is that the government is simply incapable of trying to shape the world’s perception of India – which is no fault of their own, but simply a characteristic of the society it has become. With such rapid proliferation and scrutiny by the media and civil society groups, the government is held accountable – and perhaps does a better job at it than the Opposition parties in India.

When we look at macro trends, the economic advantages India is going to derive over the next thirty or so years from its demographic profile are absolutely gigantic. As Professor Tarun Khanna of the Harvard Business School cited at the Summit – India will have a surplus of approx. 50 million skilled workers over the next few decades, whereas the rest of the world will have exactly the opposite.

Given this is the case, does it not stand that India has a fair chance of lapping China in this race to the top?

KV Kamath – India’s Banker becomes Chairman of Infosys

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Earlier today, it was announced that KV Kamath would become Chairman of Infosys – a major Indian and international IT services company that’s based in Bangalore.

In my book titled ‘India’s Inc – How India’s Top 10 Entrepreneurs Are Winning Globally’, I interviewed and included Kamath – although he wasn’t an entrepreneur per se – simply because he’d taken a boring, old world, finance institution and made it globally competitive – displaying all the traits that successful entrepreneurs display while building their businesses. In the book, I called him ‘India’s banker’ as ICICI had truly become a force in India. Their retail operations were slick, their corporate and investment bank delivered exceptional returns etc. The thing that truly marked him out, though, was his fascination with technology. He could have easily been the Chief Technology Officer for ICICI, such was his grasp of the potential technology held to provide a well deserved boost to his company.

For this reason, it came as no surprise that KVK, on retirement as CEO of ICICI, was asked to serve in Infy’s Board. So in many respects, this announcement also doesn’t come as a major surprise to the markets.

Interestingly, Narayana Murthy, founder and soon to retire Chairman of Infosys, also features in my book. Murthy’s known for many things but what stuck out was his commitment to retiring from Infosys as per the governance of the company. In many cases, such words are seen as niceties as it’s widely expected that their next generation will take over, so for this reason its important to mention and celebrate an entrepreneur who’s kept to his word on this – not that anyone has ever doubted it.

Recently, I’ve also read some of the media coverage around succession at Infosys in particular, which despite being interesting to ponder, is in fact a sign of things to come. Mr Murthy and his band of founders will retire soon. Whilst they claim that Infosys will thrive without them, Kamath’s appointment is a litmus test on their faith in the company that they’ve built.

It’ll be worth keeping an eye on Infosys, that’s for sure.

Indian Budget 2011 – what’s going on?

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It’s that time of year, again!

Finance Minister, Pranab Mukherjee met with Congress insiders to begin unveiling his thinking on this year’s Budget, which is expected later this month. His headaches include inflation, a current account deficit, high import duties, and importantly how best to increase government revenues.

So, before the big day, I’m asking all of you what to expect in this year’s Budget?

People keep on talking about India’s demographic dividend; will the septuagenarian Finance Minister understand what’s required to ensure that the future is prosperous for this massively important population bracket. A budget for the young, perhaps?

Will he use the opportunity to guarantee market reforms that enable foreign firms get a larger piece of the action? Will India Inc exert its influence to ensure home company advantage?

What policies is he going to put in place that will help India break the 10% GDP growth rate, that India desires? Education, Employability, Innovation, and Entrepreneurship are critical drivers to achieve this. What’s he thinking on these?

If you have any idea on the above, or on the forthcoming budget, leave your comments below.

From Russia with love

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In the past year, you’ve seen the who’s who of global politics make a bee line to New Delhi. Despite scams, corruption, failure of governance, and all such less desirable faces to India, David Cameron, Barack Obama, Nicholas Sarkozy, Wen Jiabao, and now President Medvedev seem keen to cosy up to a country, which when spoken of is often referred to as a slow elephant in comparison to the Dragon that’s come to symbolise China.

With the global economy facing severe challenges, its understandable that they seek to forge stronger partnerships with a nation that’s averaging GDP growth of 8.5% and with an increasingly young & affluent population. But is this the only reason?

Clearly, no.

The movement towards India is also, if not more so, about geo-politics. It’s about regional balance.

It was said that Cameron’s love for India is really about countering the emphasis the Blair gave to developing relations with China. America similarly after decades of a cool relationship with India warmed up by paving the way for the game-changing civil nuclear agreement, and the French have always been good friends with India, just as the Russians have.

In fact, it comes as no surprise that Medvedev is in India. There are some parallels and reasons to work together. Both have a massive need for infrastructure, which friends suggest, India is more likely to get done because it’s more open to foreign expertise and has lots of cheap labour. The significant differences are that India’s democracy is more developed and Russia has a serious demographic problem. It has some natural resources that India needs, but I’d say that Russia is definitely in a weaker economic position long term. That’s why Medvedev needs to work with India.

On a strategic plane, the India- Russia relationship goes back decades, for it was the Russians who were early to recognise India’s potential, both on the economic, and also on the geopolitical matrix as a counter to China, decades ago. Medvedev will be pushing an open door when in New Delhi.

You don’t need to be a genius to work out that India & China are key to the prosperity of nations like ours, but what’s critical is that the dance between the slow elephant and the fierce dragon doesn’t lead to an all out x-factor type contest where instead of houses being divided as to who’s the more meritorious, countries have to decide who to back for the big time. That’s why, in my opinion, Premier Wen’s sojourn to India was probably the most important visit of the lot.

It matters that China and India work towards resolution on key issues. It matters to the prosperity of future generations, in Russia, and the world over.

UK – India Trade & Investment Statistics – July 2010

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I found the following here:

India’s economic and political influence in the world is growing. It has enormous dynamism and potential.

India is critical to HMG’s objectives; from development, regional stability and trade and investment to energy security, climate change, counter terrorism and reform of the global international systems.

The government is committed to a special relationship with India, one that reflects our deep and historic ties and recognises India’s strategic importance.

This is underpinned by strong people-to-people links. Over 1 million people travel between the UK and India every year. Between 1.5m and 2m people of Indian origin live in the UK, the largest ethnic group. They make a significant contribution to the UK economy and enrich British society with their traditions, culture and diversity.

Partners in business
Trade and investment flows between the UK and India are two-way and continue to expand rapidly. The UK is by far the most popular business destination in Europe for Indian companies. 700 out of the 1200 Indian firms in the EU operate from the UK. Tata is the largest single manufacturing company in the UK.

Bilateral trade was £11.5 bn in 2009 and £ 12.6 bn in 2008 (Source: BIS Economics & Statistics Directorate, UK). In 2009, UK exports to India (goods and services)were £ 4.7 bn (£4,687mn) and imports from India were £ 6.8 bn (£6,763mn).

The UK is the largest European investor in India and the fourth largest internationally (after Mauritius, Singapore and the US) with £3.87bn of FDI stock in 2008. Indian FDI stock in the UK stood at £3.43 bn at the end of 2008.

The two biggest acquisitions for India globally involve the UK: Vodafone’s £7.3bn ($11bn) acquisition of Hutchison in 2007 and Tata’s £8bn ($12bn) acquisition of Corus in the same year.

Partners in the Knowledge Economy

Together, the UK and India are leaders in ensuring that knowledge sectors drive inclusive economic growth in the 21st century.

There is an increasingly close partnership across all stages of learning, from support to primary school children, between UK and Indian Universities, to research into the most advanced technologies. UK skills providers and their Indian partners help deliver vocational training to young Indians.

International education is worth over £5bn each year to the UK, part of a total of £28bn generated by the UK’s international education and skills sector. Over 40,000 Indian students enrolled for higher education courses in the UK in 2009, the second largest number after China.

There are over 80 collaborative UK-India programmes leading to UK degrees or awards in India. There are some 5,000 Indians studying for UK degrees in India.

India is one of the British Council’s biggest operations. In 2009-10 British Council administered over 210,000 UK exams in India. These were primarily English language tests and professional qualifications. The Council’s Project English aims to ensure that teachers and students of English have access to materials they need. The Project will train 3000 master teachers of English, and eventually reach 750,000 English teachers in India.

Up to 700 scholarship awards are offered to Indians by UK institutions each year, including 50 FCO-sponsored Chevening scholars. The 2006-11 UK-India Education and Research Initiative (UKIERI) has linked 475 schools and higher education establishments in the UK and India.

UK and India researchers collaborate in a wide range of areas, including key issues of global concern. The Research Councils (RCUK) Office in India and the UK Government Science and Innovation Network promote this work. In 2010, agreements were reached for up to £70m of joint-funded research in key areas including renewable energy, water, food security and health.

Partners in development

The UK works with the Government of India to reduce poverty and meet the Millennium Development Goals. DFID provided £285 million in aid to India in 2009-10, of which 44% went to national government programmes; 41% to the states of Bihar, Orissa and Madhya Pradesh, West Bengal and Andhra Pradesh; and 15% to multilaterals and civil society organisations. DFID graduated from its programme in Andhra Pradesh in 2010.

This partnership has delivered real impact in India. Since 2003, it has put 60 million additional children into school and provided 1 million new classrooms and teachers. Since 2005, it has helped save one life every 30 minutes (17,000 each year). Between 2008-10, it has provided 13 million people with access to improved sanitation.

Partners in security

Both the UK and India have suffered serious terrorist attacks over the years and are among the strongest proponents of international co-operation to counter terrorism and extremism.

The UK and India are strategic partners in this field. Bilateral operational links are expanding and deepening, in particular in the run-up to the 2010 Delhi Commonwealth Games and the 2012 London Olympics. The UK and India are sharing best practice in planning and preparedness in crisis management.

The UK-India defence relationship has never been stronger. The bilateral programme of exercises, exchanges, training courses and high-level visits across all Services continues to accelerate. The defence equipment co-operation is in good shape and includes supply of AW101 helicopters and Hawk Advanced Jet Trainers.

Partners on global issues

The UK strongly supports India’s candidature for a Permanent Seat on the UN Security Council and will continue to work with India to achieve this.

The UK and India are partners in the G20 and worked closely together to promote a global recovery after the 2008-9 financial crisis.

Migration

Migration is an important part of the UK-India relationship. The UK has its largest visa operation in India – with close to 425,000 visa applications made in 2009. The aim of the visa system is to allow the admission of genuine visitors, workers and students, whilst preventing abuse of the UK’s immigration system.

UK and India have a shared priority to prevent irregular migration and associated exploitation, and to effect the timely return of illegal migrants. We are working well together to achieve these objectives

Commonwealth Games

The UK looks forward to celebrating the Commonwealth Games in Delhi in October. The UK will be represented at the highest level by HRH the Prince of Wales.

The UK has full confidence in India’s commitment to deliver safe, secure and successful Games. British and Indian police and security officials are co-operating closely in the run-up to and the hosting of the events.

Last updated: 16 July 2010

Where’s our Trade Minister Mr Cameron?

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I agree with Iain Dale (click here)on the huge ommission by Cameron on appointing a city heavyweight to the vacant International Trade Ministers’ portfolio. Surely, this isn’t the right signal to send when you’re trying to develop a commerce based foreign policy. UKTI, whilst being ably steered by Andrew Cahn, could do with a vocal champion who undertakes the role with as much gusto as Lord Digby Jones, combined with the phenomenal practical experience that Mervyn Davies brought to the role.

In any case, if you’re interested, I’ve done or am doing the following media on Dave’s visit to the motherland:

BBC Radio 5 Live with John Piennar
Hindustan Times
BBC Radio Wales Breakfast Show
Indian Express
BBC Radio 5 Live with Gaby Logan
BBC Asian Network
Reuters
BBC World Service News
Al Jazeera English
BBC Radio 5 Wake Up To Money
BBC Breakfast Business News with Simon Jack
BBC Breakfast News with Sian Williams & Bill Turnbull
BBC News 24

Any new insights you can provide are welcome.

Thanks.

Lockerbie & Bhopal: How UK & India can take on the might of the US, together

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This piece has featured on Reuters: http://blogs.reuters.com/great-debate-uk/2010/07/26/bhopal-and-lockerbie-on-the-agenda-for-cameron-and-singh/

With his admission last week that Britain plays second fiddle to America, David Cameron has an opportunity to get one over Barack Obama during his much trumpeted first Prime Ministerial visit to India.

That Britain is keen to forge a more strategic relationship with India is not in question. Who wouldn’t? The India of even ten years ago is a much different place to one that I see every time I visit. Whether we’re talking of the new Delhi airport, the Worli flyover in Mumbai, or the ever increasing number of middle class consumers armed with cash, there’s no doubt that India’s on the rise.

Facts and statistics aside, India’s influence needn’t be solely defined by economics. In real, I believe the biggest influence she can have rests in the realm of global politics.

Under Tony Blair, the British Government lead the charge to bring India to the top table. As cheerleader, Blair did the unthinkable; he changed the way India was talked about by stating his support for a permanent seat at the UN Security Council for India. Immediately, you saw India being invited to G8 meetings, where the world’s richest nations got together to decide the future course of global events. Like a new student in an old school, India observed attentively and said little.

However, as time has progressed; and as events have benefited India, Manmohan Singh is no longer the new student. He has an edge over Obama and Cameron. His experience in dealing with global finance and economics is proving to be a major strength for India. Not only is India at the top table, but it’s bringing its experience to bear by offering solutions to global problems, like it has with the debate around the imposition of a global bank levy.

But, what I believe is that Manmohan Singh has a lot to gain from this visit. Whilst it cannot openly speak of American double standards, it can certainly use this visit to flesh out some arguments that Cameron may wish to take the lead on.

With the media debate and focus on the release of the Lockerbie bomber during Cameron’s first official visit to the U.S., Singh would do well to point out the double standards being applied. He could rightly claim that Pakistan ought to have the same treatment as Libya, after all there’s compelling evidence that both states were complicit in terrorist outrages in Lockerbie and Mumbai. Do Indian lives matter less to America?

In a similar manner, Cameron ought to take the opportunity to raise the burning issue of Bhopal, especially in the light of the U.S. attitude on BP. The EU, in the past two weeks, has offered to fund a complete survey to assess what needs to be done to make the site safe, which Singh seems reluctant to take up. By making the offer during their forthcoming talks, Cameron would neatly be making the point that America cannot be allowed to berate a UK multinational without dealing with Dow Chemicals over Bhopal.

Whilst everyone speaks of the burgeoning trade and investment relationship, the real champion of the enhanced relationship in this coalition government, surprisingly, isn’t the British Business Secretary but the new Foreign Secretary William Hague, who understands that India’s potential lies in her engagement on multilateral political issues.

I’m sure India will receive Cameron in the only way it knows, with warmth, friendship, and mutual admiration, but he needs to keep in mind that he’s going to be judged on substance, and not style – something he’s often criticised of favouring. This visit offers a defining opportunity, the type that comes along once in a while. Let’s hope David Cameron seizes the moment.

Britain must adjust to being the junior partner with India, also

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The following is an article that’s been carried by Reuters, written by me (http://blogs.reuters.com/great-debate-uk/2010/07/26/britain-must-adjust-to-new-relationship-with-india/)

Last week, on his first Prime Ministerial visit to the United States, David Cameron conceded that Britain was the “junior partner” in the special relationship. Next week, I fear that at the end of the much anticipated visit to India, he may yet again, have to concede that Britain is the junior partner in this ever increasing important relationship.

I attended an event some years ago in which the then Director General of the Confederation of British Industry (CBI) — Digby Jones — evangelised the need for UK Plc to embrace India, not for nostalgic or historic reasons, but to secure their survival. He explained “in the fullness of time, the past 250 years will be seen as a mere blip, an anomaly, in which India was subjugated. The future belongs to a resurgent India”.

It’s difficult to argue otherwise, just take a look at some of the statistics that stand out:

• Almost 25 percent of the world workforce will reside in India within the next 15 years. The average age of its citizens will be a youthful 29 in 2020, whereas in Western Europe the average stands at 45. India’s demographic profile provides a huge opportunity for her in the next century.

• India has a middle class larger than the entire population of the US — some 300 million residents, armed with a disposable income and looking for new avenues to spend their cash. The spectacular thing is that India’s middle class isn’t confined to its big cities or metros as they refer to them, but to far flung corners of the country in what are second and third tier cities, representing new markets — the Holy Grail as far as some of the world’s biggest fast moving consumer goods companies are concerned.

• Just today, I read a tweet from someone I follow on Twitter about how the Indian Prime Minister’s Economic Advisory Council has forecast GDP growth at 8.5 percent this year and nine percent next year. Now, compare that with all the talk of Britain having avoided a double dip recession as a result of the growth in our economy at a measly 1.1 percent.

That David Cameron understands the need to forge a stronger relationship with India is not in question. He’s made all the right noises, starting with a pro–India election manifesto culminating in the Queen highlighting her government’s desire to cosy up to the sub-continent in her first speech in the coalition era. He’s packed this visit with an unprecedented number of Cabinet Ministers signalling his intent on developing a wide-ranging cross departmental affair with India.

But the true question on the minds of crystal ball watchers, like me, is to work out whether this visit will fundamentally change the way we work with India or whether it’s just about style, something Cameron’s been accused of frequently.

In either case, in true Indian fashion, Cameron will be welcomed with open arms; and his eagerness to strengthen the bilateral relationship will be warmly reciprocated. Howeve securing the future prosperity of British jobs and industry will be on India’s terms, as the senior partner, unlike those set by the East India company some 250 years ago.