Richard Heald, Group CEO, UK-India Business Council
is keen to begin talks on a free trade agreement with the European Union, with a separate offer for the biggest component of that relationship till now - Great Britain.
But British businesses, already employing 800,000 people in India, would rather prefer internal reforms like ease of doing business, Richard Heald
, Group CEO, UK-India
Business Council tells Subhayan Chakraborty. He adds that technology will drive forward India's investments in Britain, the third-highest among all nations in the post-Brexit era.
Given London's willingness to have trade pacts and New Delhi's position on local manufacturing and high import tariffs, how viable does a Free Trade Agreement seem between the two countries?
Businesses tell me that such an FTA is not a priority for them. Indeed, much of UK industry
is already invested in India
with research facilities, developmental & logistical capabilities, manufacturing & assembly plants and extensive sourcing supply chains. Over 5 percent of the “organised sector” in India is UK owned. Some 800,000 workers are employed in UK owned facilities across India. As such what UK businesses would prefer are those smaller, incremental, internal reform that improve “ease of doing business” and continues to remove non-tariff barriers.
Given the fast changing geopolitics as a result of the pandemic, are British companies with investments, looking to exit China?
I don’t believe that it is a question of “absolutes”. China
has specific capabilities just as India does. China, like India, represents a significant market in itself and accordingly will remain an attractive destination for investment. The question is one of relatives. Seen through that prism, India is increasingly an attractive opportunity.
I absolutely believe that UK firms remain committed to India and will continue to invest to expand their existing footprints in India. Moreover, UK businesses are and will look to India as an incremental base for manufacturing and Research and Development (R&D). For instance, UKIBC is assisting a British manufacturer in diversifying its sourcing policies away from China
which previously provided some 90 percent of its supplies to under 50 percent by finding alternative sourcing or manufacturing opportunities in India.
How high does India rank on the list of alternative nations for setting up business?
UK companies have been investing significantly in India for decades. The rapid and significant rise in the World Bank’s Ease of Doing Business rankings is a tangible indicator of the progress being made to improve the Indian operating environment for all business including international firms.
There are always improvements that can be made as India continues to take steps to make itself even more attractive as an investment destination. Transparency, consistency and equanimity in the application of law and regulations would be a great way forward.
Overall what are the areas where you see British investment rising in India?
The UK has capabilities across many of these areas. Yet there is a common theme which is underpinning UK investment into India and that is technology. The nexus which has grown up in the UK between academia and the corporate world has caused the UK to become a world leader in upstream technological developments – be it in logistics, digital technology, Artificial
Intelligence (AI), or indeed almost any area. This upstream component of the technical supply chain is exactly what the ambitious developing Indian economy needs. Hence, in the immediate term, we see UK investment into India supporting the call of “self-reliance” in areas such as manufacturing, defence, healthcare.
Conversely, what does an Indian business stand to gain if it were to invest in Britain right now?
Like India, the UK is a dynamic and rapidly changing market. Both economies are similarly sized at around $ 3 trillion. The UK offers stability and transparency in finance, regulation, governance and law, as well as in softer areas such as culture and language. The UK is an open society home to one of the largest populations of Non Resident Indians. As such it is not surprising that India remains the UK’s 3rd largest investor and it's 2nd largest international employment generator – responsible for over 110,000 jobs in the UK.
More than 500 Indian businesses are present across diverse industries and sectors. Moreover, the UK supports this Indian investment with an extremely well-educated workforce, innovation and technological expertise, 4 of the world’s 10 best universities, and expertise in crucial areas like drug discovery, clean growth and advanced engineering.
But competing nations like Ireland and Netherlands have pitched themselves to Indian businesses as potential alternatives to the UK, given the continuing access to European markets. Your comments on this.
There is no doubt that the UK remains, and will continue to remain, an important, global economy outside of the European Union. According to EY’s Attractiveness 2020 Survey, the UK remains a compelling proposition for international businesses, including in comparison to our European partners.
The report found that foreign direct investment into the UK grew by 5 per cent in 2019, in a wider European market that grew by less than 1 per cent. This shows that the UK is already adjusting to Brexit, with partners such as the US a leading source of projects. Also, it found that R&D projects have increased to a decade high. In digital tech, the UK grew four times faster than the European average, attracting a 30 per cent share of all European projects.
In the post Covid-19 world, what are the specific opportunities for bilateral trade?
In the immediate environment, trade and collaboration in healthcare and PPE will be important for both countries. Already, we have seen the export of paracetamol from India to the UK thanks to engagement between Ministers and rational decision-making. Work on one of the world’s most promising Covid-19 vaccines is ongoing between Astra Zeneca, University of Oxford and Pune-based Serum Institute. And there are so many more areas to collaborate.
During the past months, many of us have benefitted from digital and data services in the “new” locked-down working environment work. The UK and India have huge strengths in innovative new areas, R&D and, particularly, in AI. These developments are catalysing exciting areas for growth in key segments such as Agritech, Healthtech, Fintech and Edtech. Indeed, the agriculture, food and drink industry is the one of the UK’s largest manufacturing industries, playing a vital role in the UK’s food supply chain, and has been identified for support by the UK Government in its ‘bounce back’ strategy in the recovery from COVID-19.
In fact, these three sectors – life science and healthcare; digital and data services; and food and drink – have been the three areas of focus for this years’ UK-India Joint Economic Trade Committee (JETCO), chaired by Minister Goyal and his UK counterpart, Secretary of State Truss.
Have there been encouraging signs in the previous financial year of specific sectors doing well?
Tech-rich sectors have been particularly successful in the UK-India trade and investment partnership. Indeed, around 1/3 of all Indian investment in the UK is tech-related. In 2018, Indian Prime Minister Narendra Modi and his then British counterpart, Prime Minister Theresa May, agreed to establish a UK-India Tech Partnership, to bring together UK and Indian companies, venture capitalists, universities and other stakeholders. Future challenges of upskilling of engineers in both countries amidst the demands that ‘the fourth industrial revolution’ places on the UK and Indian economies, means both countries will benefit from collaboration in knowledge, best practice and training.
Do you think the US's crackdown on short term immigrant visas like H-1B visa will help the UK in drawing high value Indian talent?
We at UKIBC have consistently advocated that the UK Government amend visa policies to ensure that talented people from Indian can study, train and work in the UK. UKIBC has been particularly active in the area around the post-study working visa. In 2021, the UK Government will begin the new Graduate Immigration Route that will enable Indian talent studying at UK universities to remain in the UK for up to two years (and PhD students for up to three years) to look for work, an increase on the four-six months that the post-study work visa allowed.
Since its announcement, UK universities have experienced an upsurge in prospective Indian students applying to the UK, so the signs are promising. Indian nationals receive more than half of all British visas as it stands and moves like this one will help to illustrate that the UK is welcoming to Indian talent. This is an area we will continue to focus on as the benefits of a more competitive visa environment accrue not just to Indians coming to the UK but also to those UK companies which invest and employ people in India and which wish to train these employees in the UK.