India

Lord Bhattacharyya Excerpts

Tuesday 18th October 2011 Lords Chamber

[Lord Bhattacharyya]

My Lords, I thank my noble friend Lord Parekh for securing this debate, and I declare my interest as chairman of Warwick Manufacturing Group at the University of Warwick.

In this debate, it is worth recalling the long history of Indian innovation. Some noble Lords may have visited the Qutb Minar in Delhi and seen the Iron Pillar which stands there unrusted since its forging a millennium and a half ago. For an engineer, the knowledge that Indian metallurgists were able to produce rust-proof iron is an inspiration still worth studying today. If the West had had such technology then, the history of the world might have been quite different. This reminds me of an important truth: only innovation and partnership can drive global progress.

As time is short, I shall focus on the economic aspects of the relationship between India and the UK. Britain used to have a dominant position in Indian trade, but we now account for less than 1.5 per cent of Indian imports. India’s desire for economic independence and Britain’s post-war atrophy both contributed to decades of decline in our partnership. India was not an easy place to do business—but while Japan helped build the Maruti and more, Britain still stood for the Morris Ambassador.

Since the early 1990s, when the then Foreign Secretary liberalised India’s economy from the finance ministry, India has enjoyed huge growth, topping 8 per cent a year. Indian GDP has more than trebled in that time and per capita GDP has grown by over a thousand dollars. So it is no surprise that everyone is trying to woo India. This weekend I was in Mumbai, as I am once or twice a month, and the number of businesses and delegations there to drum up trade is astonishing.

The noble Lord, Lord Heseltine, anticipated this growth in 1993, setting up the Indo British Partnership. He was the first to consider India as equal, with the equally charismatic Richard Needham as Minister of State, with whom I had the pleasure of serving as a founding board member. The Indo British Partnership was a business-led initiative. Our partners were not the Government but the Confederation of Indian Industry. This gave British business a real profile for the first time, and our exports to India surged by 10 per cent a year in the 1990s, increasing to 14 per cent since the millennium. Yet this did not prevent our share of Indian imports falling from 6 per cent to a mere quarter of that. The perception was that Britain was more interested in Europe and the Atlantic alliance. What is more, the language we used was often counterproductive. Britain should not appear to be lecturing to India with haughty superiority—and it is still there. I hope the new Government will avoid such pitfalls. The early visit to India by David Cameron was recognised as a very good start.

I have persuaded a number of Indian businesses to invest in Britain, so may I offer a little advice on building such partnerships? First, we must understand how important Indo-British relations are to us. Take one example—a company which I brought to this country—Tata’s. Tata Group employs over 45,000 workers directly in Britain and supports a further 100,000 indirectly. The UK Tata Group spent over £700 million on R&D last year—this year it will probably be more than £1 billion. Yet a failure to see how we gain from these investments still affects British decisions. During the financial tsunami, loan insurance was requested by Tata but it was turned away, being an Indian company. People remember such slights.

Next, we must ask what we can offer our partner. Our science base, high-tech workforce, infrastructure and access to Europe complement our cultural strengths. I have escorted many Indian business leaders around factories in Britain and seen them become enthused by our technology and our workers. We have many hidden gems. But we make it difficult to invest in them by putting up needless barriers. Of course we need strong Immigration Rules, but we should show flexibility for those who have a lot to contribute.

India knows what this takes. In fast growing sectors of the Indian economy, like pharmaceuticals and biotech—today the biggest investment worldwide in India is in the pharmaceuticals and biotech industry—the world’s biggest companies are moving to India, bringing top people, even though India has many graduates. Indeed, 700,000 science and engineering students graduate each year in India. These numbers mean we must never think of India as just a home for low-cost outsourcing.

But quality counts more than quantity. In a knowledge-based economy, there is a global drive toward higher skills to meet shared challenges. India’s technologists are at the cutting edge of that charge. I came from an Indian university—the first Indian university of technology—and 95 per cent of my classmates went to America, because it was easy. When I go and see American companies and American universities, they are full of Indian students doing their masters and doctorates, and doing research. Leading US universities and technology businesses such as Google and Microsoft are being led by graduates of Indian universities like my alma mater, IIT Kharagpur.

We could seek to join these leaders in their current challenges and thus share in their future successes. In other words, we must welcome India here as well as sell Britain there. The coalition clearly wants to do business with India. It has made a strong start after about 12 years of neglect. I only hope it ensures that India wants to do business with us.