The UK India Business Council (UKIBC) chair Richard Heald says that India offers a more “favourable opportunity and operating environment” for businesses, as compared to China. This is because of “ease of doing business, because of transparency,(and) rule of law that exists”. India has taken a number of reforms in the last few years and climbed up the ease of doing business ladder of the world bank.
Speaking to our diplomatic correspondent Sidhant Sibal, Heald also spoke about the India-UK Free Trade Agreement (FTA) talks. He said that the talks will focus on, “what India wants and what the UK can provide in terms of satisfying India’s ambition. Like areas of Electronic vehicles, batteries, the technology is being developed in the UK but is being deployed and refined in India.”
Talks on the India-UK FTA is set to begin in December with the visit of the UK commerce secretary to India.
UK is the 6th largest inward investor in India, after Mauritius, Singapore, Netherlands, Japan, and the USA with a cumulative equity investment of US $28.39 billion. Meanwhile, India has invested in 120 projects and created 5,429 new jobs in the UK to become the second-largest source of foreign direct investment (FDI) after the US in 2019 according to the Department for International Trade (DIT) inward investment statistics for 2019-2020.
WION: How do you see India-UK business and investment engagement?
Richard Heald: The business relationship is in a very good place, at this present moment in time. That might be a surprising statement, given what India and UK have gone through (during) Covid.
The way businesses in both countries have collaborated in order to alleviate a lot of negativity and suffering that has occurred during the past months has been remarkable.
For example, the collaboration between AstraZeneca and Serum Institute is a real exemplar of how the collaboration can occur, the benefits to the economy. I really do think that we (have) established very good business-to-business (B2B) ties, going forward.
WION: India-UK FTA talks are expected to start in December. What is UKIBC’s expectation?
Richard Heald: I think it is a very exciting time. It is being built up over government-to-government (G2G) collaboration between your minister and his UK counterpart and what we are seeing is many months of dialogue which has been going on over a number of years. Business is extremely excited over the opportunities available here.
In the UK we have gone through a statutory consultation period. We have submitted that to our govt and we know that FICCI and CII have done the same. That is being fed into both governments’ positions in relation to FTA.
I would add, there is going to be an announcement about the commencement of discussion around the FTA. There has already been considerable dialogue between the two governments going forward. A lot of groundwork has been put in place. I have been involved in dialogue on both the Indian and UK sides.
I have been struck by how similar have been the requests of businesses to each government. We are looking forward to levelling the playing field in terms of standards, in terms of operating practices, in terms of tariffs that align with world standards.
(This) allows us to develop those areas which both PMs have indicated are important for our two nations. Within a general context, those are the real thing that we are looking forward to.
WION: How do you see India as an investment destination?
Richard Heald: In terms of FTA, we focus on tariff barriers, in terms of trade and investment and we focus on operating ease of doing business.
What we have heard from UK businesses is that they are asking the UK Government to have an equal emphasis and equal focus on helping India improve its ease of doing business ranking.
To a large extent that is an indication of the amount of investment UK businesses are doing or have done in the past few years and decades. We employ 700,000 people in India and 5 per cent of the organised sector. So ease of doing business is equally important. GST is equally important, the digitisation of licenses is also important, more things can be done. Progress has been significant.
WION: The rationale of having India-UK FTA…How does it help India in having FTA with the UK?
Richard Heald: If we look at the relationship between UK and India historically it has always been knowing each other’s wishes, each other’s requirements and being able to transact business on a relatively free basis between each other.
Indian diaspora is fundamental to the understanding between our two countries. UK has been historically very much present in India and therefore what we are looking forward to in terms of FTA if you like to consolidate that–to focus on what India wants and what the UK can provide in terms of satisfying India’s ambition.
Like areas of Electronic vehicles, batteries; the technology is being developed in the UK but is being deployed and refined in India. It is that sort of colouration we are looking at FTA to catalyze and accelerate.
WION: Any timeline for the FTA? We saw India-EU taking their time.
Richard Heald: One observation, that when you are dealing with an entity made up of multiple nations, and you have to square off the different interests, that certainly becomes problematic.
Here we are dealing on a bilateral basis between two nations (that have) known each other for a long time and have a good relationship. I am optimistic, we will not be in the same situation.
That being said, there are complicated issues at stake here and certain items within the FTA, which both sides want to discuss and resolve, that are going to take longer to resolve.
There are early harvest agreement talks, which is a positive development and UK IBC will welcome them since it shows willingness and momentum. The way forward is to have a series of agreements that, aggregated together, will become part and parcel of the FTA. I don’t think we will see a big bang, I think it will be an incremental process.
WION: India vs China, where will UK businesses put money, especially in the backdrop of the Evergrande crisis in China?
Richard Heald: What I always say, businesses don’t tend to invest in either India or China. They don’t see the two entities as mutually exclusive; you look at where the opportunity is, which may cause you to invest in both countries.
If you look at the operating basis, I believe that opportunity and operating environment is more favourable in India versus China. Because of ease of doing business, because of transparency, rule of law that exists in India.
Also, reforms and legislations that exists in India, particularly in relation to addressing the thorny issue of dealing with retrospective tax have had a positive impact on businesses that aren’t yet invested in India.
Taken as a whole, plus, you have an extremely dynamic consumer sector and opportunity within the domestic economy. Therefore, India is an extremely attractive investment destination across a whole range of sectors. We are seeing that we have seen businesses engage, as operators within India.
