TRADE AND INDUSTRY COMMITTEE
COMMITTEE OFFICE HOUSE OF COMMONS
7 MILLBANK LONDON SW1P 3JA
Telephone: 020 7219 5777/5779
PN 41 of Session 2005-06
STRICTLY EMBARGOED: NOT FOR PUBLICATION OR BROADCAST UNTIL 00.01 HRS THURSDAY 22ND JUNE 2006
UK FIRMS LAGGING BEHIND COMPETITORS
UK companies are falling behind the US, Europe and the Far East in the race to invest in India's fast growing economy.
A report by the Trade and Industry Committee concludes that our unique relationship with India should be generating a much higher level of trade and investment than is actually the case.
MPs found that UK firms have only a partial understanding of the Indian economy despite it becoming the fourth largest economy in the world with the second largest population of 1.1billion.
Their report says that many UK companies view India merely as a source of low-cost labour rather than as an emerging market in its own right.
Now MPs are concerned that 'the UK's perception of India has been seriously distorted by the media's focus on the perceived threat to UK jobs from outsourcing, particularly call centres, creating a view that these centres are the dominant feature of the Indian economy.'
There are, in fact, amongst others, considerable openings for investment within the manufacturing and automotive & aerospace sectors and vast opportunities for the UK's higher education sector.
The Committee's report encourages UK companies to become more vigilant if they are to take full advantage of India's fast liberalising economy.
MPs also believe the UK's institutional support to be 'characterised by confusion' with too many overlapping bodies and ill-defined responsibilities. 'Viewed from India, the UK is a small country, and we need to be far more focussed to have a real impact.'
Commenting, Committee Chairman Peter Luff said:
"Levels of interest in the Indian economy are growing year upon year - but UK investors don't yet really understand the opportunities that India presents. If we are to take full advantage of this golden opportunity, UK firms must reassess their perception of the Indian economy as simply a source of low-cost labour and the UK Government must do more to help them."
Notes to Editors
1. Embargoed electronic copies of the Report are available. Please email requests to firstname.lastname@example.org or telephone 020 7219 5777
2. Media Bids/ Requests for interviews with the Chairman should be directed to Luke Robinson on 07917488549.
3. The title of the report is 'Trade and Investment Opportunities with India'. HC 881-I.
4. Real GDP growth in the India economy was 8.5% for the financial year ending March 2004, 7.5% for the ending in March 2005, and 8.4% for the year ending in March 2006.
5. The Indian middle class is forecast to grow to around 200 million people in the next 15 years.
6. In 2004/05 the UK was India's fourth largest good trade partner (4% of India's World Trade in goods) after the US, China and Belgium.
16 June 2006