Priti Patel is the Member of Parliament for Witham and is the Prime Minister’s Indian Diaspora Champion
Last week’s visit to India by the Prime Minister marked another important milestone in the UK-India relationship. It was his third visit to India as Prime Minister, his second of the year, and a strong demonstration of his personal commitment to the relationship.
No Prime Minister since Indian independence has done so much to foster good relations between the two countries, and we are now beginning to make up for half a century of missed opportunities. Bilateral trade is on course to double to £23 billion by 2015, exports from the UK to India are up by 25 per cent in 2013 and the UK is benefiting from Indian companies pumping more investment into this country than the rest of the EU.
India is developing into a 21st century global economic powerhouse, and Britain should be Europe’s best-placed country to benefit from the increase in prosperity and jobs that this economic growth will bring. With the European Union’s economic strength relative to the rest of the world weakening and the proportion of our trade going to Europe dropping below 50 per cent, Britain is increasing trading opportunities with developing economies and emerging markets. Future export markets for British-based businesses and opportunities for inward foreign direct investment will be dictated by a ‘less Europe, more Asia’ doctrine. Britain has once again become an outward-looking nation, and there are many powerful reasons why strengthening the relationship with India is the right priority and why the Prime Minister is right to be taking a leading role.
First, there is a common history and language that binds our two countries. Although India is a diverse country with many languages and dialects being spoken, officials and the middle classes speak English. They value the English language and many aspire to study in the UK. This means that the widespread use of English helps us to do business together. Since the 1990s, India has been liberalising its markets and from the discussions which took place during the Prime Minister’s visit we are seeing the Indian Government using its institutions to create the right environment for free market economic growth.
Second, what struck me about this trip to India was the progress that has been made between the two countries since our last visit in February. The UK is now the largest European investor in India and more Indian investment comes to the UK than the rest of the EU. Indian companies already have in the UK creating jobs and growth. Tata is just one of over 900 great Indian companies investing in the UK. UB Group has acquired Whyte and Mackay, Welspun India holds a majority stake in CHT Holdings and Great Offshore acquired Sea Dragon. With the reductions being made to make corporation tax in the UK to make it the lowest in the G7 and cuts to red tape, Britain is becoming a more attractive destination for foreign direct investment. We should be proud to invite a new wave of Indian businesses to follow in the footsteps of Tata and invest here.
Third, UK companies must be able to make the most out of trade with India. Around 400 UK companies already have a presence in a range of sectors in the Indian economy, including healthcare, ICT and construction. With the Indian economy growing at a rate of over 5 per cent a year and containing a population of 1.2 billion, there are many more opportunities for UK businesses to invest in India, establish a presence in the country and increase exports. The 1,000km Bangalore to Mumbai economic corridor is one project which will transform part of India into one of the most dynamic, innovative and prosperous regions in the world. The expertise of British companies could be put to great use in this part of India, and businesses in the UK and in India will have been encouraged by the Prime Minister’s interest in the Bangalore-Mumbai economic corridor last week. This is a major infrastructure project which India could deliver with large levels of support and investment from British firms.
Fourth, there is an untapped potential to use the connections and families of Indians living in the UK to bolster trade ties with India. Over the last century, the numbers of people living in the UK who were born in India has increased by more than ten times to around 700,000 and about double that number, 1.4 million people, classify ‘Indian’ as their ethnic group. The Indian diaspora in the UK maintain strong connections to their families in India and many possess an entrepreneurial spirit. We should do more to bring British Asians into more prominent roles in society to help reinforce our relationship with India and explore new trading opportunities. I am honoured that the Prime Minister has asked me to work with him on forging these closer ties with Indian communities in the UK.
Fifth, closer engagement between the UK and India will help India to expand its markets and use trade to lift millions out of poverty. Strong rates of economic growth have already seen poverty levels fall in recent years from 37 per cent in 2004/05 to 22 per cent in 2011/12. According to estimates from India’s Planning Commission the number of poor people in India is at almost 270 million, with 80 per cent of that number in rural areas. Although other estimates of the number of poor people in India, including from the World Bank, have placed higher numbers on those living in poverty, they still show a downward pattern. Nevertheless, more action is needed to reduce the numbers who live in poverty and challenging conditions every day.
The most effective way the UK can support the Indian government’s efforts to alleviate poverty is to increase bilateral trade. This will help India generate the revenues necessary to enable access to healthcare, education and food to improve and develop new employment opportunities. By 2015, when the UK’s bilateral aid programme to India, which costs around £200 million a year, is phased out, the value of trade between the UK and India will have risen to £23 billion. UK-India trade and investment will be doing far more to support economic development than a taxpayer-funded aid programme can achieve.
Finally, we must deepen UK-India relations and expand bilateral trade before our interventional competitors do. Other countries already recognise the potential economic benefits of increasing trade relations with India and if we take our eye off the ball then investment opportunities, jobs and growth will be lost to them. Competition for trade and investment is increasing and we must do all we can to position Britain as a reliable, dependable and first-rate trading partner India can feel confident doing business with. The Prime Minister’s dedication and strategic approach to cementing the relationship between the UK and India is vital to secure more economic benefits for this country and to help Britain win the global race.