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Friday, September 29, 2000



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`UK, IT gateway to Europe for India'-- -- Sir Rob Young, British High Commissioner in India

Ranabir Ray Chowdhury

SIR ROB YOUNG, the British High Commissioner in India, is an engaging conversationalist, and it was a pleasure talking to him, in Calcutta. He listens carefully to what one has to say with the result that one leaves him with the feeling that the traffic of ideas has been a two-way exercise instead of the one-way fare that is the usual lot of the scribe. But, of course, he is an ace diplomat, giving nothing away that could be construed as being impolite, always donning the garb of propriety -- embellishe d with a disarming smile -- especially when he has perforce to say something which can be described as gentle criticism of the state of affairs.

Not that Sir Rob ventured to say anything of the sort during the hour-long conversation although he did tend to agree that the ultimate test of the sensible reforms policy being pursued in India lay in its successful implementation rather than in legisla tive action or exultation. As he put it, ``in the end it has to be a collective effort to make people agree with it right through the system, and I agree that that is the biggest difficulty of all in the management of any change in any organisation, howe ver big or small.''

As for the Indian experience with reforms, he said a lot had happened in the past decade compared with the previous 40 years. He, however, added that a lot more was needed now and that there was, indeed, a consensus in this direction. But there were so m any vested interests and old habits of behaviour as well that it meant, inevitably, that the reform process was ``somewhat zigzag''.

Responding to a query about the state of the Indo-British Partnership, he said that, obviously, it was a ``child of the beginning of the liberalisation process''. It could not have happened ``without the opening up of India to the outside world, commerci ally speaking''. He added that, as he saw it, it had been a success though with one caveat -- ``it is always difficult to be sure to what extent government action is responsible for promoting particular bits of trade, particular contracts, particular imp rovements in exports or imports, and what would have happened anyway because firms are taking advantage of the changed and improved situation.''

In any case, the ground reality is that, since 1993 (when the Partnership was formed), trade between the two countries has doubled. The number of joint ventures approved has been more than 1,200. Sir Rob said that the trade figures were at record levels at the end of 1996 (3.5 billion pound sterling). Unfortunately, the ``economic downturn in India in 1997, 1998 and indeed in 1999'' led to a ``quite significant'' drop in that figure. However, the good news is that the trade figure has climbed up again. British exports to India in the first seven months of 2000 are up 45 per cent, compared to the same period's figure in 1999. Indian exports to the UK in the same period have climbed by 21 per cent. The High Commissioner said that if the trend was mainta ined for the rest of this year, ``2000 will see a bigger figure for two-way trade than even the record year of 1996''. If the invisible trade was included (roughly at more than a billion pounds sterling a year), ``we could be on target to reach the total of five billion pounds sterling two-way trade, visible and invisible, which was set by the two Prime Ministers in 1993 as the target for 2000.''

British diplomats, even in modern times, have habitually been masters of the art of understatement. Sir Rob thinks this performance was ``good'' though it would have been better if the Indian economy had maintained a seven per cent growth rate in the sec ond half of the 1990s. This scale of achievement in the sphere of trade with India, kept Britain in the second position after the US and ahead of Japan, Germany and France. He pointed out that, at the moment, the share of Britain in India's overall trade was about 6.7 per cent and, significantly, this was higher than Britain's share of trade vis-a-vis any other country.

The High Commissioner described the experience with joint ventures as a ``mixed bag''. Of the 1,200 approvals since 1993, only about 25 per cent has translated into actual investments, which is the proportion application to all FDI. Sir Rob added that if one extracted from the figures the ``big-number items'' such as the fasttrack power projects -- which have been in the reckoning for seven years now -- then the approvals rate for British JVs would come to around 30 per cent, ``which is better than the average for India as a whole''. But, of course, ``still it was not good enough,'' and it showed there were ``administrative, bureaucratic and other hurdles to overcome in setting up investments in India.'' The FDI figures relating to China were an indica tion that investing in India was a ``problem''. Even so, the High Commissioner said his country was doing well in terms of getting JVs set up on the ground, which is pure criterion for judging a project's success.

A part of his job was to get medium- and small-sized firms in the UK interested in investing in India. As he said, on the face of it, there was great interest among these firms in getting to know about the investment potential of India. There is a lot of potential ``but, frankly, a lot of firms have this perception that India is a difficult market to get into, even though they accept that once you are in, the returns are good.'' He added that one very rarely found a British firm pulling out of India, wh ich underscored the view that, but for the perception-problem, many more British investors would have been operating in India by now. Sir Rob said that he could not think of a single British firm which could say: ``We have been in India for 10 years and we have not got anywhere.'' On if there were any favourites in terms of sectors for British investors, he said his impression was that the interest was more or less ``across the board''. As for the Indian small and medium-size entrepreneurs, Sir Rob said the demand for entering into JVs with their British counterparts, far exceeded the supply.

When asked how Britain fared in the IT sector, particularly vis-a-vis the US, the High Commissioner said that ``certainly, India had put a lot of eggs into the US basket over the last nine to 10 years and understandably because the US IT industry is huge and extremely dynamic, extremely innovative, and it is not surprising that it has been a magnet for Indian firms and individuals.'' But, he felt, that there was likely to be an increasing interest in the European IT market over the next 5-10 years. It i s ``underdeveloped'' now, in American terms, but the market is growing: It is 370 million people now within the European Union, but in 10 years, when the Central and Eastern European countries join the EU, the market will have expanded to 500 millions, ` `with a very high proportion of middle-class people''.

He felt that Indian firms would do well to position themselves now, and Britain is manifestly the best place to locate if the European market is to be serviced in the coming years. Besides other reasons, Britain had the largest and fastest growing IT ind ustry in Europe. There were as many as 70,000 IT firms in the UK, and ``it was quite interesting that, over the last three to four years, of the 120 or so new Indian investments in Britain -- whether takeovers, mergers, start-ups whatever -- 60 have been in the IT sector''. An effort was also being made to encourage British firms to set up IT ``back-office processing'' facilities in India (such as the huge BA ticketing facility in Mumbai). But also, imitating the Stanford University-Silicon Valley exper ience, there were plans to encourage far more collaboration between British institutions, such as universities and research institutions, and similar Indian bodies and Indian IT companies ``to achieve a greater stimulus between academic research and the software business''.

In this regard, the ``Get Connected'' seminar series, introduced last year, has been very successful, the objective being ``to bring together British and Indian institutions specifically to encourage greater interaction between research and the business end in the IT sector''.

Related links:
Indo-UK S&T ties to focus on IT, biotech
Will India-EU ties reach summit now?
`IT is priority sector here for UK investments" -- High-level trade team coming

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