Mumbai: Companies in the UK are enthused about India opening up various sectors for foreign investments and they are keeping a close eye on recent events, said David Wootton , Lord Mayor of the City of London, who was in India this week meeting top government and Reserve Bank of India (RBI) officials.
Companies in the UK would like to invest more in India, particularly in the infrastructure space, provided any single project is given to them fully for the lifetime rather than seeking financial assistance merely as investors, he said.
In an interview, Wootton, who was also a key official in the recently concluded Olympics Games in London, spoke about how cross-border trades and deals should be encouraged to get over the slowing global economic environment. Edited excerpts:
What is the purpose of your visit?
I am here to promote primarily business between India and the UK and, London in particular, in both directions. Our delegation includes lawyers, real estate chartered surveillance, accountants, publishers, etc. It’s a wide range of business, mainly services sector professionals.
Are you focusing more on the services sector?
Primarily yes. London is mainly financial and professional services, but we don’t stop there. We promote other sectors such as manufacturing, particularly infrastructure.
Are you looking for investing in the infrastructure space?
The Indian public authorities will look at the projects that they wish to undertake, which could be roads, ports, airports, railways, energy, hospitals, healthcare, schools, a big public project. They will decide in each case whether they wish to undertake those projects out of public funds, in which case what British business looks for is to be involved in the construction and delivery of the project. And once it’s built or constructed, then the service of operating it and maintenance.
The estimate is that India’s infrastructure projects in the next few years will need a trillion dollars and the government would be looking at the private sector to fund about half of that. What London has is expertise from start to finish.
It’s not just I will lend you money to build a school. It’s the financiers and the other services providers who will get together to provide a school not just immediately but over the entire life of this school and that alters the form of financing. It means financing for the life of the school and not just the immediate delivery. Where the states are ready to offer a project on private money, we would be ready to offer the entire project. It’s a form of FDI (foreign direct investment), certainly.
But all sectors are not open to foreign investment...
There are sectors which are restricted and we very much welcome the announcements in the past couple of weeks about permitting a higher element of foreign participation.
If the pension sector opens up in India, will you be interested in investing?
Yes. We would certainly be interested. By investment, we don’t mean taking away, we mean bringing in... investment funds, and just as important, investment skills. In particular, how the liability side in pensions is managed and how the investment side is managed. That’s a skill and London has that skill.
The UK pension management industry is a very important one. Again, by investment we mean coming here inevitably in partnership with an existing Indian company and building skills and building up something permanent. And, of course, that would mean we would learn skills for india. There are things that you do better than we do.
Does the recent opening up of the airline and retail sector excite you?
It does excite us. There are regulatory rules here, there are regulatory rules in the UK in financial businesses. There have to be. The Indian financial sector is regarded as well as regulated, it is not seen as over-regulated. The British businesses that are here are happy to be here.
In Delhi, we met Kamal Nath (urban development minister), (Anand) Sharma (trade minister), (P.) Chidambaram (finance minister). We discussed... reforms with each of them. We said we are enthusiastic. We respected that these were India’s decisions and India’s processes; the ministers conveyed confidence that these proposals will go through. The ministers said they were very keen that the British companies should invest more. We will obviously keep a very close eye on events.
Do you see scope for cross-border deals in a slowing world economy?
I think there is more scope than there was before, and more need. It’s very easy when a company detects a slowdown and do nothing, and that accelerates the downward trend. Governments and private sectors around the world are spending a lot of time worrying about it but they actually need to gain and take active steps to promote trade because trade and cross-border investments will move us up rather than down.
But many companies are not in good health.
I think that trade is effective but I am not very convinced about mergers and acquisitions unless they create effectively a new business venture which is going to generate more economic activities. There are companies here which have expanded rapidly and over-borrowed, we don’t want that.
Did you discuss foreign bank licencing norms with RBI?
There are a number of new licences to foreign banks that RBI could issue. The foreign banks will always like more licences but it’s India’s decision. We discussed the key role which foreign banks can play in India’s development of microfinance, for example, what banks like Standard Chartered and HSBC are already doing.