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

Posted on July 26, 2010 by Vikas Pota

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.

Af-Pak: this is the ONLY game changer in the UK – India relationship

Posted on July 8, 2010 by Vikas Pota

ADVICE TO DAVID CAMERON FOR HIS FORTHCOMING PRIME MINISTERIAL VISIT TO INDIA

Accompanied with the increasing level of media interest in the Prime Minister’s forthcoming visit to India, it’s heartening that my recent posts on the bilateral relationship have also stirred some interest.

Regardless of the substantive points that result from this visit, it’s obvious that this opportunity will be used to affirm the new Government’s desire to bring a step change to the relationship.

There’s been speculation as to the shape and size of the accompanying delegation, and the only difference from the past, as far as I’m concerned is that David Cameron’s taking almost a third of his Cabinet with him, I assume, to underscore the emphasis on building a wide ranging, cross departmental, relationship. So, I’m lead to believe Messrs Hague, Willets, Cable, Osborne, are definitely on, as are blue chip CEOs like Stuart Rose of M&S.

Such a symbolic act serves to assure Indian counterparts of Team GBs’ seriousness, which I’m sure will be warmly received and all goodwill credited & reciprocated over the term of this parliament.

Apart from the presentational aspects of the visit, which I accept are fairly important, my thinking on the substantive points that may emerge and set the path for an enhanced relationship have also been in development.

In previous posts, I realise that there’s been a far too great an emphasis on the trade & investment relationship. Actually, when I sat down to think about the real game-changers in the relationship during the Blair era, the vast majority came as a result of a change in thinking in our Foreign Office.

So, it’s no surprise that William Hague, during his years in wilderness, has cultivated a fairly strong understanding on India, and that he should realise that the following two aspects are critical to the step-change that the coalition govt aspires to:

DECOUPLE INDIA-PAKISTAN

Not that I see this as too much of a problem, but there is a tendency to link the two neighbours. This hyphenation creates unnecessary tension, as the past ten years clearly demonstrate, India’s charted a very different path to Pakistan, there’s definitely a sense that the world needs to treat both countries on their own merits and not as a hyphenated couple.

The most obvious example of such a change in thinking i.e. one based on merit, is that of the US – India Civil Nuclear Agreement, which broke the mould and provided a much needed step change to the US – India relationship. Despite both India & Pakistan being nuclear armed nations, it was made clear that no such deal could be done with India’s neighbour as a result of her poor proliferation record.

We really don’t need to balance what we do with India in Pakistan. Both countries are separate entities, with their own prospects and challenges. So let’s treat them as such.

The added advantage the Tories have is that they don’t need to be worried about the Pakistani vote bank in constituencies across Britain, which to a degree resulted in Labour’s need to perform a finely balanced act in the way it treated India & Pakistan. It was felt that the impact in Labour seats of any divergence in treatment could have a material impact in local & general elections.

AFGHANISTAN

That India wants what we and the Americans do is not in doubt. A stable Afghanistan is the aim that the international community rightly aspires to. However, the big difference is in approach.

Also, there’s a school of thinking that promotes that India has a limited role and view to offer, which couldn’t be further from the truth. India has a vested interest in the region, and used to share a border with Afghanistan pre 1947, so to argue otherwise shows a shallow understanding of the region.

The difference in approach I refer to is that of engaging the enemy, which in this case is the Taliban… which we seem to favour. For India, this is a total show-stopper. Given that the last time the Taliban got involved in running Afghanistan, India suffered badly.

We’d do well in remembering the hijacking of Indian Airlines flight 184 in 1999 where the Taliban regime provided safe passage to the Pakistani hijackers who took control of the plane, which was forced to land in Kandahar. On the airstrip, the Taliban even moved its well armed fighters near the aircraft in an attempt to prevent Indian Special Forces from storming the aircraft! This flash-point was a massively significant event for India, which played out on national TV for days and is etched permanently in their national psyche. So to ask them to cast it aside as an extreme, sole example shows our total insensitivity.

Furthermore, it transpired in later investigations that one of the Pakistani militants who was released by the Indian authorities in the barter deal for the return of hostages, went onto form a terrorist group called Jaish-e-Muhammed, which received extensive aid from the Taliban and pro – Taliban groups in Pakistan for attacks in India.

To say that the approach to bringing an enduring stability to Afghanistan matters is important, would be a major understatement and show a major disregard to a country that Cameron is trying to forge a “strategic partnership” with.

A “strategic partnership” necessitates the convergence of views on domestic, regional, and global issues, where you try and understand each other’s sensitivities in order to work more effectively to achieve mutual goals. In 2004, Blair ensured there was a convergence of views on foreign policy – by stating our support for India’s seat on the UN Security Council; by calling a spade a spade when it came to condemning Pakistan for supporting cross border terrorism in Kashmir; and finally by ensuring India was invited to G8 meetings, albeit as an observer.

We may have our political pressures in wanting to bring our troops back home, but if this means that we’d have to engage the Taliban in discussions, India’s track record with them and their obvious discomfort need to be taken into consideration, as once we’ve left we’re going to have to rely on regional partners (read: India) in ensuring Afghanistan’s stability.

Prime Minister Cameron needs to work towards assuring India that our approach to Afghanistan and Pakistan would have their interest at heart. Without this, I fear the “strategic partnership” that we’re all looking for remains an aspiration.

If there’s a game-changer, then this is it.

David Cameron meets Indian CEOs

Posted on June 15, 2009 by Vikas Pota

I’d organised a meeting yesterday between David Cameron, Leader of the Opposition, and a client of ours called ‘The India Group’, which is an alliance of the European based CEOs of large Indian private sector firms. Not only did we meet someone who’s described as our next Prime Minister, he also made sure that William Hague, Shadow Foreign Minister, and Ken Clarke, Shadow Business Minister, both of whom are considered ‘heavyweights’ in the Conservative Party, and should retain their high profile portfolios if they form the next government, attended this meeting.

Cameron was relaxed despite having to respond to the Prime Minister’s Iraq Inquiry statement later in the day. He appeared knowledgable and personable and had, what seemed obvious to me, been briefed appropriately in advance on the key issues that may arise.

So, it’s no surprise that business immigration featured highly with the IT companies leading the charge on labour mobility within the UK in the context of TUPE legislation. He spoke about Ken Clarke leading a review on Whitehall red tape that will help form their policies in advance of the next general election.

On trade promotion in India, Cameron suggested that some of the Regional Development Agencies across England would be put on notice. He recognised that trade promotion in India may also need looking at and the India Group recommended that just as Indian SMEs seemed to be embracing opportunities in the UK, the Government really needed to push British SMEs to do more with India. Banks like ICICI had tried linking up with counterparts in the UK to provide trade finance for their clients interested in India, with not much success, which seems a shame given the scale of the opportunity.

Hague spoke about a better relationship on foreign policy, which all India watcher’s will agree about, especially as Miliband’s visit to India was seen as an unmitigated disaster. Hague spoke of their support for India and Japan for permanent seats on the UN Security Council, which we know China has a different view on.

The Conservative team were interested in the pace of market reforms the new Congress lead coalition would take, to which the India Group agreed that the Insurance sector would probably be the first to have FDI levels increased. What was interesting was that the CEO’s, all, were united in conveying that despite the shortcomings in some industry sectors, India was open for business. It just so happens that the two big sectors that the UK has particular competence in – financial services and retail – are the one’s that have yet to be liberalised. Fair point.

Closer to the hearts of some of those was the issue of personal taxation and non-dom, to which Cameron was quick off the blocks to suggest that had the government adopted the plans they’d suggested, those around the table would have the certainty they desired.

I’ll conclude with sharing how they started as it’s an important point. Cameron emphasised that both – the Labour Party & the Conservatives (a) didn’t really differ on issues concerning India – whether this was trade or foreign policy and (b) that both parties shared the view that Britain was a better place as an open globalised economy, one which market protectionism and restrictive practices were unwelcome.