Full transcript: Richard Heald interview with CNBC-News18
Our Chair, Richard Heald, spoke to CNBC-News18 on the prospects for UK-India trade post-Brexit. See the full transcript here
Q: What are the risks to UK’s trade after Brexit and how is the business confidence in UK economy?
A: There are two aspects to the question that you ask. The first is Scottish referendum – that is a decision that is obviously the Scottish Parliament has said yes, we would like a second referendum. But actually it is not their decision, it is the decision of the UK Parliament sitting in London and the Prime Minister has made the position very clear: not at the moment. Therefore, to a certain extent, we can put that element of uncertainty, as you characterise it to one side.
As far as Brexit goes and the process it is now going to be evolving for the next two years, there is uncertainty there but again, you can analyse that down. If you are a UK company looking at India, India is still an extraordinarily attractive economy in which to invest, in which to do business. So, we are seeing an increase in foreign direct investment (FDI), an increase in activity flowing from UK into India. The opportunities are there and connects are improving and therefore from that side, clearly Brexit is a diversion in those flows.
Q: But what about the other way round? We will talk about how UK businesses look upon India, but how about the other way round, outward FDI? India has been among the top-three FDI inflows into UK comes from India. So, in that sense, has the mood changed? What are you picking up?
A: We did a survey immediately after the Brexit vote came through in June and we were surprised to find that a large amount of the Indian investment in the UK is in the UK not for European Union (EU) reasons. It is actually for UK reasons. So, an Indian company is investing because of the research and development (R&D) capability in pharmaceuticals or IT or engineering. They are not necessarily using it as a manufacturing base in which to export into the EU.
Undoubtedly, some companies are and there are certain sectors where there are concerns about what is going to happen. If you look at the financial services sector in particular, its aspect that we talk about co-passporting which allows UK registered companies to sell their products into Europe. That is being called into question and no doubt it will be one of the cards that are played or used in the negotiation process.
Q: Theresa May was of course here in India a few months back, here first bilateral visit outside of the EU. The big opportunity, the areas where you think India and UK could really collaborate on during these uncertain times.
A: The major area is around the key areas that India is developing in, around defence, around IT, information technology services (ITS), particularly in areas like financial technology (fintech), educational technology (eductech), these sort of areas which are crucial to the development of India.
Q: One concern has always been about how India has 29 states, but they often operate as 29 different countries and this has been said mostly in terms of the taxation rules. Now with the goods and service tax (GST), almost there. It has been a 17 year long wait. Things take time, but eventually finally; it seems that the July 1 deadline will be met. I am sure you must be sending briefs to many of your clients, updating them about what this means. What are they telling you?
A: Actually I am hearing from my clients rather than sending the briefs and indeed, GST is going to be an evolving process. Yes, July 1 is your deadline but at the same time, I am sure that the finance ministry do not believe that it will be spring to life from January 1 perfectly formed. There are a lot of areas that we believe that there are areas where we can interrelate with the ministry of finance with industry in general to help this whole process work. Do not get me wrong. I think GST is really good news and it does actually create for the first time, a single market in goods and services within India.
Watch the full interview here