Priti Patel is an elected Member of the Conservative Party Board, the 1922 Committee’s Executive and the Public Administration Select Committee. She is also a member of the Party’s Policy Board and MP for Witham.
The Government’s commitment to increasing trade and exports was given a vital boost last week as we took our engagement with India to a new level. So highly has our Prime Minister marked the importance of UK-India relations that two of the most senior Cabinet Ministers – the Chancellor of the Exchequer and the Foreign Secretary – jointly led a delegation for the first time, which I was also a part of in my capacity as the Prime Minister’s UK-India Diaspora Champion.
The delegation announced exciting new trade deals with India and met with leading political and economic figures, including the county’s new Prime Minister, Shri Narendra Modi, on the same week that his Party, the BJP, presented its own historic budget to the Indian Parliament. Modi has shown that he is a man who can deliver stronger economic ties with the UK and re-energise his country, backing up his words with actions.
Upon arrival in Mumbai last week, we all felt the renewed sense of confidence and excitement that has been manifested in the early days of Modi’s new administration. With a government reform programme designed to realise India’s high growth potential, it seems that its large and vibrant population feels more optimistic about new opportunities, their economic prospects and their place in the world. The word on the streets of India right now is: “Achche Din” – good days are coming.
With the vast range of new opportunities in India that UK businesses can look forward to, this delegation’s most important meeting was with Mod himself. Having met him before the recent elections, he is without a doubt an inspirational leader. His own personal story of his humble beginnings to becoming the most successful-ever Chief Minister of Gujarat and now India’s new Prime Minister sets him apart from other politicians, and connects him with India’s enormous aspirational and hardworking population.
Equipped with his charismatic personality and strong economic record, established while Gujarat’s Chief Minister, Modi earned a reputation as a man who inspired a new generation to engage and participate in politics during the recent election campaign. He is the global leader with the largest democratic mandate in the world. At a time when voter turnout is low in some western countries, his personal ability to engage first time voters and use new technology to communicate political messages alongside his very clear desire for a new style of governance has transformed the hopes and aspirations of India’s very young and dynamic population.
In the 20 years to 2030, India’s working aged population will growth by 200 million, which is two-thirds of an estimated total global growth in people aged between 15 and 30 in that period. With both the pressures and the benefits such a change in demographic has to offer, Modi has set about delivering this vision for India, with economic policy the key driver of change.
The Modi Government’s Budget delivered positive news for both domestic and foreign audiences and, following the BJP’s landslide election win, marked the second chapter of India’s renaissance under his premiership. New measures were announced to strengthen the foundations of their economy, with a sensible approach to fiscal policy taken and new economic reforms introduced to open up their markets to foreign trade and investment. In many respects, the content of the Budget had similarities to the economic policies being pursued by Conservatives in the UK. Just as we are strictly controlling public expenditure in the UK, raising the threshold for paying income tax, boosting capital spending on infrastructure and making the UK globally competitive, Modi is doing the same in India.
Despite Indian economic growth being above the global average, it has slowed in recent years and a significant deficit of four per cent of GDP has emerged. Modi is getting a grip on spending to prevent the deficit widening, with a commitment to lowering it supported by plans to increase public spending at roughly the same rate as inflation. Having seen the mess that large deficits can inflict on an economy in the UK under the last Labour Government, Modi should be commended for the early and decisive action he has taken to control spending.
During the Budget, Arun Jaitley, the new Finance Minister, also announced reforms to unify and reform the tax systems of India’s 29 federal states in order to establish a common market to bolster trade and investment. A review of retrospective tax claims that have hitherto created a risk that has deterred some inward investment was also announced. Other measures announced to encourage inward investment included plans to permit foreign investment in the defence and insurance sectors to rise from a maximum of 26 per cent to 49 per cent, the selling of state assets worth in the region of $13 billion and an opening up of private sector opportunities to help finance infrastructure projects.
India plans to spend $11 billion on rail infrastructure this year and, by opening up the state-owned network to foreign investment, Modi is not only supporting inward investment in this sector, but is encouraging investors to work with him to fulfil his wider economic vision to create 100 new cities in India. Modi is more than aware that public funds alone cannot achieve the levels of investment needed to deliver his vision of a prosperous India, and this gives British investors and businesses an opportunity to gain new footholds in the Indian market.
The decisions in the Budget will therefore strengthen the India economy and open up new opportunities for British investors and exporters. The CBI has recognised this and praised the Budget for giving “further confidence that Mr Modi intends to deliver on making India an open environment in which to trade and invest.”
Since Modi has some to power, the Indian Government has become even more willing to engage with the UK to pursue mutually prosperous endeavours. Maximising investment and trading opportunities with India to open up the market for UK goods and services to enter was therefore top of the agenda when the Chancellor and our delegation met Arun Jaitley and Raghuram Rajan, the Reserve Bank of India Governor.
Following these meetings, the Chancellor announced major examples of working together: up to £100 million of investment to the UK from Indian pharmaceutical company, Cipla; £20 million of new investment from auto company Mahindra for research and development facilities in the UK, and a £250 million defence contract. These new commercial deals not only cement closer two-way economic relations, but they represent the ease of doing business between countries are such natural trading partners.
To support further trade and investment, the Foreign Secretary also confirmed plans to trip increase our diplomatic presence in India and open a new Deputy High Commission in Ahmedabad, to bring the total number across India to seven in addition to the British High Commission in Delhi. Since 2010, we have transformed the diplomatic network so that its focus is on supporting the Prime Minister’s ambitions to double the value of UK exports to £1 trillion by 2020. By bolstering our presence in India, we can help UK firms secure deals in what will become the world’s third largest economy by 2030 ahead of their competitors.
On the final day of his visit, the Chancellor made another significant announcement that would mark a major milestone in UK-India relations: a new £1 billion line of credit for investment in Indian infrastructure. This represents the largest ever UK offer to support a sector in a single country. As one of Modi’s priorities is to address India’s infrastructure deficit with a programme of new development, UK companies are now enabled to help meet India’s infrastructure needs and take advantage of the reforms announced in the Budget.
With those deals concluded and announcements made, the delegation’s successful visit to India came to an end. But our Government’s commitment to export led economic growth and Modi’s very clear vision for India is a clear indication that greater trade between the UK and India will take place. Businesses in Britain will reap the benefits of the resurgent UK-India special relationship and we look forward to supporting India’s new Prime Minister as he endeavours to create a new, more inclusive and prosperous country.