UK-India Trade

Keith Vaz Excerpts

Wednesday 25th January 2012 Westminster Hall

[Mark Field (Cities of London and Westminster) (Con)]

It is a pleasure to be here under your chairmanship, Mr Walker, and in a debate initiated by one of my close friends in Parliament, my hon. Friend the Member for Wimbledon (Stephen Hammond). I will speak, if I may, very briefly.

I have made two visits to India—in 2003 and in 2006. Between those years, there was a change in Government. What struck me was the confidence of the business and political classes in New Delhi and Bombay. I suspect that, six years on, there will be an even greater sense of a country that is forward looking and confident of the future, notwithstanding all of the issues that have been raised by hon. Members in this debate.

Above all, it is important that we do not see India as just another Asian nation. Both UKTI and the Foreign Office have tended to regard Asia as just one area, which is what we tend to do with eastern Europe as well; we see it as an homogenous area rather than recognising its great historical importance.

One of the issues that I hear time and again, particularly where our companies are competing against German companies, is that the German embassies based in India, China or South Korea recognise that their role is not to be some sort of propagandist for their country but to drill down and work out who is really important in the local community. Therefore, it is important to have attached to the embassies people who are there for many years, developing long-term relationships.

[Keith Vaz (Leicester East) (Lab)]

Will the hon. Gentleman give way?

[Mark Field]

If the right hon. Gentleman does not mind, I will not give way, because other Members wish to speak.

There is a lot of doom and gloom at the moment. We have seen today that our economy has contracted by 0.2% in the past three months, which I suspect may be the precursor to a fully fledged recession in this country in the next few months. Clearly, there are major problems in the eurozone market, which are not going to go away any time soon. In fact, I fear that they will be there for a long time to come, because there is not the political will to drive forward. As a result, it is perhaps easy to be gloomy about the economic situation. One of the interesting things about the IMF report yesterday was that it was presented as being very negative, but even the most pessimistic scenario suggested that there would be global growth of 3.3% next year. Indeed, some 4% was suggested during 2011.

In a conversation with one of the two Chinese law firms that have opened in London in the past couple of years I mentioned the global economic recession. A partner, who was a Chinese native with perfect English, smiled and said, “Back home, we call it the north Atlantic crisis”. There is a very important lesson for us to learn. Amid all that doom and gloom, let us get out there and recognise that we have great strengths.

In relation to India, some of the important issues have already been mentioned. We clearly have some good connections on the manufacturing side, especially in the technology and bio-technology sphere. There is much that India can teach us. Nehru has that legacy of those five great technology universities that remain a great success.

The Minister has done a phenomenal amount of work in this area in often difficult circumstances. Privately, he knows that I do not entirely support our immigration policy and I suspect that, behind closed doors, he has some sympathy with my views. We need to be a beacon for the brightest and the best. We must encourage young Indian, South Korean and Chinese people to come to this country. If they spend two or three years as students here, they will be ambassadors for this country for the rest of their lives. I am afraid that our policy on the headline figures is wrong. [Interruption.] I do not wish totally to eliminate the Minister’s career, and I am sure that he has a few words to say.

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[Lorely Burt (Solihull) (LD)]

My hon. Friend the Member for Cities of London and Westminster (Mark Field) should have no fear about the need to build a Boris island, because we are having our runway extended in Birmingham, in the west midlands, where a great number of members of the Indian subcontinent reside and we will be able to take another 18 million passengers.

The biggest employer in my constituency and a key player in the west midlands in terms of jobs and growth is Jaguar Land Rover. We have heard about corruption, but that company is exemplary. It is a far-sighted company that looks towards the medium and the long term and cares for its employees.

I want to speak briefly about the EU-India free trade agreement. We have already heard about the summit that is due to take place on 10 February. However, despite hopes that negotiations about the agreement will reach a conclusion, it has become clear that the best expected result is a limited agreement on trade in goods. Crucial negotiations on services, investment, public procurement and intellectual property rights will continue. The failure to reach agreement on those areas is a shame, because there are huge benefits for the EU generally in reaching agreement with India. India is a market of more than 1.2 billion people, with a burgeoning middle class and an economy that, according to some statistics, is now growing faster than that of China.

For the UK, trade with India is hugely important. In 2009, it was worth £11.2 billion. Moreover, the UK seems a natural partner for collaboration with India, particularly on education, which has already been mentioned, as well as on low-carbon and energy efficiency development, science and research, and advanced manufacturing, including in the aerospace and defence sectors.

Among the most serious obstacles in the negotiations about the EU-India free trade agreement are the unwillingness of India, first, to include the automotive sector in the agreement and, secondly, to reduce the tariff on car imports, which is currently 100%. India is also unwilling to include wines and spirits in the agreement. For example, our wonderful Scotch whisky receives a tariff of 150% in India. And another obstacle is the reluctance of India to include a sustainable development chapter in the agreement.

I am sorry to say that the EU is also putting in place obstacles to the agreement. They include an obstacle related to mode 4 services, which is a controversial “defensive” interest for the EU. “Mode 4 services” refers to where the EU negotiates the temporary transfer of personnel from a partner country to provide a service within a corporation for a limited period of time. The EU normally only negotiates trade commitments for professionals if they have at least a university degree-level of education. It is a great shame that we cannot allow other people to come into the EU for a limited period when they have skills to bring, including training skills, and when they have a contribution to make to the economy of the EU, including the British economy.

[Keith Vaz]

The hon. Lady makes a very powerful case for relations with India. I want to make one point. When our Prime Minister and our other leaders go to India for summits, far too often they take “the great and the good” with them. Is it not important that they should also try to take representatives of some smaller businesses, which are the driving force of growth in trade between our two countries? And those representatives of smaller businesses should of course come from Birmingham too.

[Lorely Burt]

The right hon. Gentleman makes an even more persuasive case by referring to Birmingham. He is absolutely right that small businesses are the generator that is dragging us out of this recession, and the ability of small businesses to access Indian markets is vital. He could not have made a more appropriate point.

Can the Minister say whether the Government will reconsider their position on mode 4 services and come back with an improved offer as a means of unlocking the EU-India free trade agreement, hopefully by the end of this year?

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[Guy Opperman (Hexham) (Con)]

rose—

[Keith Vaz]

rose—

[Mr Willetts]

I give way to the Chairman of the Home Affairs Committee.

[Keith Vaz]

The Minister, of course, was on the side of the angels when we considered student visas. Is it still the view of his Department, as opposed to the Home Office, that we want more Indian overseas students to come and study at our universities?

[Mr Willetts]

The British Government have a shared view, to which, of course, all Departments subscribe. Included in that, as I said, is the fact that there is no limit on the number of suitably qualified foreign students who can come to legitimate universities. However, I fully accept the challenge of communicating that effectively, given how the policy has sometimes been reported, not least in the Indian media. One reason why I have paid visits to India is to communicate as clearly as I can that there is no numerical limit on legitimate students coming to legitimate higher education institutions.