UK-India Trade

Mark Field 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.

[The Minister for Universities and Science (Mr David Willetts)]

I completely support the policies of the Government of which I am a Member. There is no numerical limit on the number of overseas students coming to study in Britain, provided that they have the proper qualifications and they are going to attend a legitimate higher education institution.

[Mark Field]

I do understand that. Will the Minister also recognise, though, that the message is that this country is not entirely open to those brightest and best people? We must have a message that we are open not only for business but for the brightest and best to come to this country.

[Paul Uppal (Wolverhampton South West) (Con)]

rose—

[Mark Field]

If my hon. Friend will excuse me, I will not give way because others really do wish to speak.

As a London Member of Parliament, I believe that if we are to exploit these connections with India, we urgently need to invest in our infrastructure—what I am about to say now will give the hon. Member for Hayes and Harlington (John McDonnell) some satisfaction—which means a 21st-century airport. Even before Boris Johnson talked about an estuary airport on Boris’s island, I was a great believer in an entirely new airport. Patching and mending either Heathrow or Gatwick is not the right solution. A new airport will be one of the most positive messages that we can put across. We want to attract the brightest and best, particularly out of Asia. An estuary airport will provide the dozens of flights that we need each and every night to come through from those countries to land in London without disturbing the constituents of the hon. Gentleman or of many other London MPs. Thank you, Mr Walker, for allowing me to make a brief contribution.

--- Later in debate ---

[Mr Iain Wright (Hartlepool) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Walker, as I did in the Education Bill Committee. My mother sends her regards. [Interruption.] That was a private joke; hon. Members would need to have been in the Education Bill Committee to understand it.

I congratulate the hon. Member for Wimbledon (Stephen Hammond) on securing this debate, which has been excellent. The contributions to it from right hon. and hon. Members have shown how important the economic, social and cultural links between the UK and India are. At the heart of our countries’ relationship is our close historic links. However, we should not look at the relationship too sentimentally. Instead, as we have done in this debate, we should assess how increasing trade with India could significantly boost income and prosperity for both countries.

Right hon. and hon. Members have mentioned the links between India and their own constituencies. For example, the hon. Member for Solihull (Lorely Burt) mentioned Jaguar Land Rover, and I will be pleased to meet representatives from the company later today. The hon. Member for Romsey and Southampton North (Caroline Nokes) mentioned the Solent India Business Network. In my constituency, we have Tata Steel, and that combination of Indian investment and Hartlepool skills provides steel pipes that are exported all over the world, are laid across the globe’s oceans and provide prosperity. The North East of England Process Industry Cluster has very strong links with the Indian chemical sector, and delegations have visited the north-east and India in recent years. A focus of this debate has been India’s huge potential, and as the global economy moves eastward, the potential for closer trading links with India should not be underestimated or overlooked.

India has emerged very resiliently from the global recession, with economic growth averaging at about 7.2% for 2000 to 2008, slowing only marginally since the world financial crash, to about 6%. The medium and long-term forecast is 8% to 10% per annum. As a result of a growing middle class in emerging markets, it is estimated that international trade and investment will expand faster than general gross domestic product, and that is particularly true of India where robust domestic demand, a high savings rate and a young population all play into the forecast that expenditure will rise fourfold in the next 20 years. We need to be at the heart of that. My hon. Friend the Member for Brent North (Barry Gardiner) said that although trade with India has become relatively more important to us in the UK, it is becoming less important to India. That point needs to be addressed, and I hope that the Minister will give a response.

The fact that India is a parliamentary democracy, with a mature civil service and an independent judicial system, should serve to reassure investors and exporters. One theme of today’s debate has been concern about corruption in India, which will compromise potential business investment, and I want to mention last week’s ruling by the Indian Supreme Court that Vodafone does not have to pay the tax bill on its acquisition of Hutchison Essar in 2007. My sense is that that demonstrates that the judicial system is independent of the Government, and that should help to provide a huge boost to foreign investors in India. It would be useful to get the Minister’s opinion on that matter.

The hon. Member for Wimbledon was particularly strong in saying that we should work to our competitive advantage. We are very good at exporting to India the likes of business and financial services, but we need to do a lot more because we are underutilising our potential. He was right in saying that we are very behind the curve when it comes to things such as construction services and exploiting the huge investment in infrastructure, in the road and rail networks that India will be providing. We need to do a lot more, and I hope that in his winding-up speech the Minister will say how we will broaden the range of export activities that we can provide to India, not just business and financial services but in the fields of construction, chemicals, science and infrastructure.

[Mark Field]

Another very important area, particularly given the common language—the official language in India is English—is intellectual property. Given the passion for sport, there is an opportunity to export premier league rights and other things. We are increasingly able to export a huge amount of animation and other UK products, not just to India, but to other parts of Asia.

[Mr Wright]

The hon. Gentleman is absolutely right about intellectual property, and I hope to come in a moment to the matter of legal services.

It has been almost a year since the Government’s trade White Paper was published, and the Opposition agree with its broad direction and rhetoric, particularly its focus on emerging markets. I suggest that that journey started under the previous Government and that the present Government are continuing it. In the White Paper, the Government stated that the conclusion of an EU-India free trade agreement was a top priority—a focus of today’s debate—and it was estimated that it would produce an additional €4 billion in trade by 2020. We agree that the successful negotiation of a trade agreement is important, but that negotiation has stalled. The White Paper stated that a conclusion was expected by the end of 2011, and I recall that when the Secretary of State for Business, Innovation and Skills made a statement to the House on the White Paper, he specifically mentioned the agreement and said that progress was being made—a fact mentioned by my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Brent North. Will the Minister update the House on when the free trade agreement negotiations will be concluded? Will they be concluded by 8 or 10 February? What will we see in the agreement? Will it be watered down to the point at which it is meaningless?

The White Paper also states that the Government will work towards a doubling of trade with India by 2015. This is a fairly dramatic objective, although laudable in its ambition, and I wonder precisely how the Government will help businesses to achieve it. That will be difficult, given that the most recent trade figures show a growing decline in exports to non-EU countries, including India. Moreover, the CBI monthly trends survey for December reports that export order positions remain well below long-run averages for the second month running. Companies are stating that present export orders above normal are plus 12, but those reporting below normal are minus 44. Given those concerning figures, will the Minister outline how the doubling of trade, which, as I said, is laudable, will be achieved?

Part of the solution is to encourage and incentivise as many British firms as possible to consider exporting their goods and services to India, but in doing that businesses face several problems, which have been highlighted today. The British Chambers of Commerce’s international trade survey found recently that 70% of small and medium-sized enterprises are not current exporters and are not likely to be in the next few years. I agree with the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) that we need to encourage and incentivise trade outside the EU to boost prosperity in our country. What will the Government do to help achieve that? What will the Minister do to address that issue, specifically with regard to India?

A potential barrier is the lack of appropriate finance for exports. The export enterprise finance guarantee scheme has been up and running for about a year now, so will the Minister update the House on how many businesses it has helped, and in particular how many businesses have benefited from the scheme in exporting to India, and the value of the goods in respect of our economy?

I want to talk about regulatory barriers to trade between us and India, particularly in relation to high-value professional services, such as banking, legal services and accountancy. As has been mentioned, we still await the liberalisation for foreign banks and the opening up of competition to foreign players. That could significantly increase British exports in this field, particularly in parts of India with no banking provision. What work are the Government doing, alongside the World Trade Organisation, to ensure that India’s banking system is opened up to competition? There is a similar position regarding legal services. It remains illegal for foreign lawyers to practice law in India, and it is proposed to address that issue in the EU-India free trade agreement, but will the Minister say something about the work being done to come to some agreement on the provision of legal services?

In my profession of accountancy and auditing, there remains a restriction on the ability of global accountancy and consultancy firms, many of which are based in Britain, to use their brand names for auditing and accountancy purposes. The Institute of Chartered Accountants of India has negotiated a memorandum of understanding with the Institute of Chartered Accountants in England and Wales, of which I am a member, which allows members of one body to join the other in certain circumstances. That should boost trade between the two countries. It should provide regulatory and auditing rigour, which should improve corporate governance and reporting, and therefore reassure investors, which in turn would help the Indian market to grow. Given our expertise in knowledge-intensive industries, we have huge potential here, but it would be useful to hear more from the Minister about how he intends to facilitate such growth.

The hon. Member for Cities of London and Westminster (Mark Field) said that we should be a beacon for the brightest and the best, and that brings me on to student visas. I am very pleased that my right hon. Friend the Member for Leicester East (Keith Vaz), the Chairman of the Home Affairs Committee, is here. We have a huge reputation in higher education, but there is a perception that student visas are somehow a barrier and that we are somehow closed for business. Will the Minister outline the discussions that he has had with his counterparts in the Home Office about how that will be addressed?

Close historic and social links have the potential to grow into equally close and mutually beneficial investment, commercial and trading opportunities. We welcome the scope for more Indian direct investment into the UK, while wishing to see our exports grow to ensure that India becomes a more significant partner. Given the strength of feeling and the backing of Members in this debate, I hope that the Minister will be able to outline how UK-India trade will grow still further.