Business and Enterprise Committee

PN 34 - 18 April 2008

BRITAIN'S UNIQUE ADVANTAGE IN INDIA MUST BE SEIZED, MPs SAY

The Business and Enterprise Committee today (21st April) releases its fifth report, Waking up to India: Developments in UK-India economic relations. This follows up on its 2006 report, Trade and Investment Opportunities with India, which warned that greater engagement was imperative. In its new report the committee says that the UK is uniquely well placed to take advantage of the opportunities in India.

The Committee is pleased to find that UK plc appears to have 'woken up' to India, and today's report commends the Government for the increased resources that have been allocated to India by UK Trade and Investment, the trade and investment promotion body.

The Committee is also gratified to see its recommendation for the Indo-British Partnership Network to become the de facto bilateral chamber implemented, following the creation of the UK-India Business Council and a significant increase in funding. The report notes the good work the UKIBC is already doing.

However, the report warns that despite these improvements, with India's economy growing at 9 percent a year, this is no time for complacency.

The Committee criticises the slow progress in the inter-governmental UK-India Joint Economic and Trade Committee (JETCO) process in key areas for UK businesses - financial, legal, accountancy, and retail services. These are areas in which the UK has a clear trade advantage, but in which liberalisation will also bring real benefits to India. The Committee seeks clear reassurance from Ministers that momentum of the liberalisation process is being maintained.

The report expresses concern that although more Indian students are coming to the UK, the UK's share is declining relative to its competitors, notably Australia It calls on the Government to carry out a comprehensive study of how the UK could be made a more attractive destination to Indian students.

While the establishment of an Education Forum is welcome, the report notes that visa issues and limits on post-graduation working may be reducing Indian students' enthusiasm to study in the UK. It therefore specifically recommends that the policy example set by Scotland, which allows Indian graduates to remain for two years, be extended to England and Wales, where they may currently only stay for one year. The Government should also consider extending the period beyond two years for qualifications in certain specific professions that require longer periods of work experience, the report says. The report also seeks improvements to the arrangements for visas for business travellers.

One of the most significant developments since the Committee's 2006 report is the opening of free trade talks between the EU and India. The Committee welcomes this development, with the proviso that the world trade negotiations, the Doha Round, are not undermined. It recommends that, if an EU-India deal is reached before the Doha Round is completed, it should be reappraised once a Doha agreement is reached, and urges the Government to press the European Commission to commit to reviews of any RTA agreed before Doha is finalised.

Committee Chair Peter Luff commented:

"The Indian middle class continues to grow, Indian business is now supremely confident and the huge deals companies, are entering into - like Tata's acquisition of both Corus and Jaguar Land Rover - demonstrate a determination from which Britain is uniquely well placed to gain advantage.

There is a reservoir of goodwill towards Britain in India which gives us a competitive edge in trade and investment relations unmatched by any of our competitors, but there is no room for complacency.

We need to establish a relationship as special with India as the one we have enjoyed with the US. I hope the Government takes note of the recommendations in our report to aid this process."

Further Information:

Committee membership is as follows:

Chairman: Peter Luff MP (Con) (Mid Worcestershire)
Mr Adrian Bailey (Lab) (West Bromwich West)
Roger Berry (Lab) (Kingswood)
Mr Brian Binley (Con) (Northampton South)
Mr Michael Clapham (Lab) (Barnsley West and Pen.)
Mr Lindsay Hoyle (Lab) (Chorley)
Mark Hunter (Lib Dem) (Cheadle)
Miss Julie Kirkbride (Con) (Bromsgrove)
Anne Moffat (Lab) (East Lothian)
Mr Mike Weir (SNP) (Angus)
Mr Anthony Wright (Lab) (Great Yarmouth)

The Committee's previous report, Trade and Investment Opportunities with India (HC 881-I), can be accessed here: http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtrdind/881/881i.pdf

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