Bill Emmott - International Author & Adviser

Article

Note to PM: tell India we’re open for business
The Times - July 26th 2010

Cue, inevitably, headlines about passages to India, jewels in crowns and Cameron-sahib. Cue, probably, pictures of the last Tory prime minister to visit the sub-continent, Sir John Major, and his unfortunate encounter with a silly hat. Cue, certainly, promises of a new start in Britain’s relations with India, claims of wasted Labour years, declarations of the need to throw off post-imperial hang-ups and embrace a new emerging power. But cue, also, Indian puzzlement, wondering what all the fuss is about.

 

            That is the sort of pattern that can be expected when, this week, David Cameron heads a rather extraordinary 90-strong delegation to India, including William Hague, George Osborne, five other cabinet ministers and a huge party of businessfolk. It is extraordinary thanks to its sheer scale but also, arguably, to the contrast with the prime minister’s last overseas visit, to Washington just a few days ago. There, he sought to play down notions of a “special relationship”. With India, he hopes to play up exactly that sort of notion by forging, supposedly, a “special partnership”.

 

            Consistency would be more appealing. Just as in America Mr Cameron called for a sober and realistic “partnership of choice”, founded on the two countries’ national interests, so the re-use of that language in Delhi and all around India would imply more respect for the country he is visiting, more realism and more understanding of its economic and political circumstances than would a lot of guff about specialness. That is particularly so given that Britain is simultaneously planning to cut back its big (£825m over three years to 2011) overseas aid programme for India.

 

            It is right to cut back that aid given that India now has a space mission, a growing defence budget and an overseas aid programme of its own. But to do so while also claiming you want to improve your relationship raises quite a few questions in India. They are not answered by pointing at a planeful of businessmen hungry for contracts. General de Gaulle once dismissed a visiting Japanese prime minister as just a “transistor salesman”. Does Mr Cameron want to be seen in India as just a salesman for Hawk jet trainer aircraft?

 

             To avoid that fate, the British delegation needs to focus on the two countries’ national interests and on how they might overlap during the next decade, but especially on those of its host. India’s foreign policy is already firmly founded on its own commercial and political interest, and not on idealism, sentiment or history. Thanks to its rapid economic growth—likely to hit 8-9% this year—and that of the whole Asian region, those interests are themselves continually changing.

 

            In the short term, India’s main economic challenge is controlling inflation. Looking further ahead, however, its hopes are, in effect, to emulate the China of the 1990s, by expanding and maintaining a vast infrastructure programme, including airports, roads, ports, electric power, water and telecommunications; to expand its manufacturing sector, which will create far more jobs than the IT-services boom of the past decade has been able to; to redevelop and expand India’s cities; and to invest in and secure the natural resources abroad needed to fuel both infrastructure and manufacturing.

 

While that is going on, India has three main needs abroad: to keep world markets open for its own businesses, which are ambitious for more overseas investments like those of Tata in steel and cars in Britain; to improve its thorny relationships with its own neighbours in South Asia, especially Pakistan, Bangladesh and Sri Lanka; and, most important of all, to prevent its giant rival and neighbour, China, from dominating Asia and bossing India about in its own neighbourhood.

The single biggest thing that Mr Cameron’s cabinet team could do to fit in to those Indian trends would be to reassure their hosts about the one topic that is clearly in Britain’s control: our own openness to investment, trade and immigration from India. Is Britain really “open for business” given the fuss last year about Kraft’s takeover of Cadbury, and given the new government’s plans to limit immigration from countries outside the European Union? Those would be reasonable questions for the Indians to ask.

A second promising area is defence. No doubt the 60 or so Hawk jet trainers that British Aerospace hopes to sell (albeit to be manufactured by an Indian firm) will garner nice headlines back home, as defence sales always do. India is, moreover, diversifying its range of defence suppliers, having relied heavily on the Soviet Union during the cold war, so there will be other opportunities for sales.

More meaningful politically, however, would be a deepening of co-operation between our respective military forces, planners and diplomats, around the Indian Ocean but also more broadly across Asia. India already has allies in its efforts to avert Chinese domination, notably the United States and Japan, but might Britain play a lower profile but still useful role as a middling power with good Asian contacts and strong naval expertise and technology?

For Britain, such deepening could help the military adjust to slimmer budgets; it also might, eventually, help draw India into more involvement with rebuilding and redeveloping Afghanistan, a neighbourhood task it has so far largely resisted. In imperial days, Indian soldiers died in Afghanistan to defend British interests, while now the roles are reversed.

In business, many will be preoccupied by manufacturing exports and the bilateral trade balance. That is where some of the “wasted years” talk arises. In fact, Britain hasn’t done too badly in this respect, with exports to India rising by 14% a year since 2002, and a much smaller deficit in merchandise trade than Britain runs with China. There is plenty of scope for further, especially high-tech, export expansion. But the bigger action, and the action that most fits India’s needs, lies in services: design and engineering, for all that infrastructure; logistics, as trade grows; marketing, as consumption rises and matures; finance, as the country’s capital needs expand; education, as India’s own shortages of highly skilled graduates start to bite again, as they were doing before the economic crisis.

Many of those service sectors depend for their development on changes in Indian laws and thus Indian politics. So acting as a transistor salesman, in this case for insurers, banks and universities, makes some sense. But prime ministers should not take it too far. Too close a link with business deals can be dangerous as well as humiliating. Mr Cameron should be well aware of that, having had his last overseas visit hijacked by questions about BP’s special partnership with Libya.


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