UK to Strengthen Economic Ties with India

July 7, 2014 Posted by India Briefing Reading Time: 3 minutes

DELHI – British finance minister George Osborne and foreign secretary William Hague kick off a two-day visit to India today that will aim to strengthen economic ties between the two countries and enhance bilateral cooperation in defense and infrastructure development.

The visit by two of Britain’s most senior government ministers is the first since Narendra Modi and the BJP took office last month and the latest in a recent series of high-profile visits to the country.

Other delegates eager to consolidate economic cooperation with the Modi administration have included French foreign minister Laurent Fabius, Mauritian PM Navin Ramgoolam, Russian deputy minister Dmitry Rogozin, U.S. Senator John McCain and Chinese foreign minister Wang Yi.

At the helm of the world’s sixth largest economy, PM Cameron’s Conservative party has increased British engagement with emerging Asia to secure several key trade and currency clearing agreements this year. Up for re-election in 2015, Cameron is also eager to court the UK’s 1.5 million-strong Indian diaspora at the polls by strengthening his government’s relationship with the newly-elected Modi administration.

During their trip, Osborne and Hague are expected to meet with finance and defense minister Arun Jaitley and announce substantial R&D investments in Britain by car maker Mahindra and pharmaceutical giant Cipla, increased scholarship money for Indian students and progress in Vodafone’s ongoing tax dispute with the Indian government.

In infrastructure and defense, Osborne is likely to discuss the potential for increased British investment in the construction of the Delhi-Mumbai Industrial Corridor (DMIC) and lay the groundwork for India’s possible purchase of the Eurofighter jet (partially constructed in Britain) after a deal for 126 French Rafale fighters stalled last year.

“I believe a stronger relationship with Britain will help deliver the new economic policy of the Indian government,” said Osborne.

“Prime Minister Modi is seeking more investment in India’s economy – and I want British companies to provide it, and the British government to support it.”

Behind Singapore and Mauritius, the UK is India’s third largest investor. Last year, the UK exported 7.7 billion pounds (US$13.10 billion) in goods and services to India and imported goods and services worth 8.8 billion pounds (US$14.97 billion).

Also in India this week is the UK minister of energy and climate change, Baroness Sandip Verma, to discuss how India can best reduce carbon emissions without adversely impacting its economic growth and development.

“We want to work closely with India in addressing climate change by sharing the lessons we have learnt and the technologies we have access to. We see this as an opportunity to work together and share our knowledge. We have to understand that even the green economy is worth trillions of pounds so we don’t need to reduce our growth. There is no need for it. All we need to do is adopt new technologies which are cleaner and safer for the planet,” Verma said in Kolkata yesterday.

With PricewaterhouseCoopers (PwC) now predicting India will become the world’s third largest economy by 2030, western nations are eager to lay the framework for increased FDI over the next two decades.

“In the long run, other emerging markets may overtake the UK, but only India looks set to do so before 2030 according to our latest projections,” PwC said in its latest economic outlook last week.

While many European governments – including the UK – sought to distance themselves from Modi following his alleged involvement in the deadly 2002 Gujarat riots, relations have been overwhelmingly positive since his inauguration as prime minister in June.

“It’s great to be here at a time when the excitement about the Indian economy, and the optimism about the prospects for future growth, are palpable. And the excitement here is matched by new confidence among international investors abroad in the future of the Indian economy,” Osborne said today.

“It is a measure of the ambition and drive of the new government of prime minister Modi, and this complete turn-around in sentiment about the Indian economy has been achieved in just seven short weeks, since that stunning election victory.”

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