Active Stocks
Thu Mar 28 2024 15:29:14
  1. Tata Steel share price
  2. 156.10 2.13%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,446.65 0.41%
  1. ITC share price
  2. 427.85 -0.04%
  1. Power Grid Corporation Of India share price
  2. 277.15 2.25%
Business News/ Politics / Policy/  Gujarat has potential to attract British investment: Patricia Hewitt
BackBack

Gujarat has potential to attract British investment: Patricia Hewitt

The former UK trade secretary talks about UK’s belief in India’s growth story, and its focus on Gujarat and West Bengal

Hewitt says India is seen as moving in the right direction and making some politically difficult decisions. Photo: Pradeep Gaur/Mint (Pradeep Gaur/Mint)Premium
Hewitt says India is seen as moving in the right direction and making some politically difficult decisions. Photo: Pradeep Gaur/Mint
(Pradeep Gaur/Mint)

Patricia Hewitt is chairperson of the UK India Business Council that promotes trade between the two countries. In India to launch the UK India Business Centre, the first in a major emerging market, the former UK trade secretary spoke about UK’s belief in India’s growth story despite the current difficulties and how British businesses will be focusing on states like Gujarat and West Bengal that offer new potential. Edited excerpts:

Why open a centre in India when India is not even Britain’s largest trading partner?

We believe in India. We the business people at the UK India Business Council and also the UK government, as Prime Minister David Cameron demonstrated when he chose India for his first major international visit and then came back here again earlier this year. So I would say in Britain there is a very strong belief in the India growth story, but there is also a strong belief that as Britain grows, in the future, particularly after the financial crisis, we need far more of our businesses exporting, and not just exporting within Europe but exporting to the growth markets of the world; that means India.

Why now and why are you so optimistic about India?

There is no doubt there are short-term difficulties. There are short-term difficulties in most economies, few lucky people have escaped this. We have had some very big difficulties with the global financial crisis and the euro zone crisis impacting us in the UK and our biggest export market, which is the rest of the European Union, which has been very badly hit by the problems in the euro zone and the low growth there.

But, when I talk to all my British business colleagues who are in India, they are in India for the long term. So we decided at the end of last year, we were looking at how to expand our own foot print in India, and Prime Minister (Cameron) announced he was backing a plan that had been developed by Lord Stephen Green, the trade minister, to really mobilise British business around the world to support other British business to come into growth markets.

And Lord Green developed this plan for 20 priority markets and in which, of course, India was the largest, to build on existing business organizations and create British business centres around the world in priority markets. That’s where we took the lead in creating the first of these British business centres in India. We are planning six in the next few years. And yes, the last several months, with the impact on the rupee of developments in the West it has been very difficult, but the message coming through all the time is focus on the opportunity and investment for the long term don’t be distracted by the short-term blips because the opportunities are still here.

The Indian government has recently passed some reform legislation like the land acquisition law and the pension fund regulatory and development authority law. Do these moves give confidence to investors that India is moving in the right direction?

And I think particularly given the current account deficit, the recent instability in the rupee and so on, actually there is an even stronger case than we would be making a year or two ago for further liberalization in insurance and even in pension so that you can really mobilize both domestic savings and inward international investment to help drive growth.

Other than states like Maharashtra, Karnataka and Haryana, which other states have potential to attract British investment?

Certainly Gujarat. In a sense that’s both a traditional and a non-traditional area for Britain given the relationship over the last 10 years and the significant change in that over the last year. But Kolkata and West Bengal, we have been doing some interesting work there, for instance, in urban development. And about a year ago we brought together a number of our infrastructure companies to work with the West Bengal government on a master plan.

Any regrets for not being in Gujarat for the past 10 years?

I was simply indicating that there was a history there. Let me step back a bit. I came to Gujarat as a government minister in 2002 and I opened the UK trade office in Ahmedabad. And that was shortly before all the difficulties (the 2002 Gujarat riots) and the change in relationships between the governments. The trade office has continued to operate but you know it’s been a different relationship from the one we would have with other states. That I think was the right thing to do at the time, but certainly last year we took the view, and most of the British business community took the view, that it was really central to engage with Gujarat both because of the historic links with the Gujarati community and the UK and because of the growth we are seeing in Gujarat.

And with many other countries and their governments prioritising potential investment in Gujarat, it would have been wrong, I think, for the British government to not make a change in its engagement with Gujarat. And so privately we were pressing hard for this change in policy and we welcome (UK foreign secretary) William Hague’s announcement last year.

What kind of feedback are you getting from British businesses in India?

I would start by accentuating the positives because there are so many British businesses doing very well here. Of course, there are many more changes that Indian and British business leaders would like to see, and one is certainty and predictability in taxation and I guess also more generally in regulation. As you know uncertainty and unpredictability is the thing that makes it most difficult for businesses to invest and grow their business. And then there are other specific changes clearly—the single window of approval for some key foreign investments.

What about the Vodafone case? Vodafone is reported to have said that it wants arbitration under international law than Indian law. How does this case affect bilateral business ties and India’s image as an international investment destination?

It’s not been helpful, which is why you get the Indian business organizations and ourselves all making the same case to the Indian government about the need for predictability. But the individual case, I think, there are discussions going on, so I am not going to get into those details.

The government announced rules for FDI multibrand retail last year and issued some clarifications on the provisions recently. But companies like Tesco, for example, haven’t really shown interest in entering the Indian market.

There were worries I think with the initial announcement on multibrand FDI that the kind of conditions that the government of India was putting around it; some sourcing conditions, for example, would be very difficult to comply with in practice. And so companies were seeking clarifications on that. And I think that the most recent clarifications have been very welcome and we will now see how the partnerships develop.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 19 Sep 2013, 11:20 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App