Richard Heald, CEO’s May 2017 Newsletter

By Simon Jones


It has certainly been an eventful, and indeed a historic few weeks.

The announcement of a “snap” UK General Election for 8th June has introduced an unexpected turn of events into the mix. While the opinion polls indicate one result, much can change over the course of the next weeks.

The Election does introduce uncertainty into future Government policy. Nonetheless, the UK India Business Council is planning for an increased level of activity post 8th June. Our approach is predicated on a belief that, depending on the result, by and large personalities and policies may not change.

Indeed, the UK India Business Council believes that recent political events in event prior to the election announcement in the UK as well as in India have further enhanced the country as a destination for exporters, FDI and FII flows:-

  • The triggering of Article 50 in March has now made Brexit much more of an immediate reality. This has already led to a tangible increase in both G2G and B2B activity within the UK India economic corridor recent months.
  • The remarkable State election results in early March, most noticeably in Uttar Pradesh, has put the ruling BJP party and the NDA coalition into a strong position with regards to the next Indian General Election in May 2019. Key will be how Prime Minister Modi decides to grasp the dual opportunities of a relatively weak opposition and a potential majority in the Rajya Sabha prior to the Central Elections. Will he use his strength as an opportunity to push through with further reforms – on top of GST – in areas such as labour and land reforms? Conversations with senior members of the Administration would indicate that there is a fair chance that he will be bold. This is positive.
  • The combined impacts on the economy of “demonetisation” and the introduction of GST are becoming clearer. The payments systems for both the corporate and retail sectors are undergoing significant digitisation. The informal business sectors are being forced to upgrade their practices across segments. OEMs and Primes are reviewing their supply chains to ensure that their suppliers are GST compliant.

Against this background and perhaps also because of it, our confidence in terms of the UK-India economic relationship remains very positive.

Moreover, it appears that India’s commitment to the UK remains undiminished. Grant Thornton together with the CII, launched last week their 4th annual “India Meets Britain Tracker” which monitors the latest trends in India’s investments into the UK. India remains the 3rd largest source of FDI into the UK. Indeed, the 800 companies tracked have aggregate revenues of some £47.5bn. The full report is accessible here.

In many ways, I believe that the dialogue between India and the UK is improving. In the past few weeks we have seen successful visits of the Rt Hon Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy as well as separately by the Rt Hon Sir Michael Fallon MP, Secretary of State for Defence.

Moreover, the Chancellor of the Exchequer, Rt Hon Phillip Hammond MP, also led a delegation to Delhi and Mumbai during this same period. The main thrust of his visit is to promote the financial services and tech industries – both UK areas of expertise and in which India too has significant potential.

The Chancellor was joined on the delegation by several senior business leaders from UK FinTech and financial services firms, as well as FinTech envoy Eileen Burbidge, Commercial Secretary Baroness Neville-Rolfe and International Trade Minister Mark Garnier.

Mr Hammond also attended the 9th India-UK Economic and Financial Dialogue in Delhi, discussing areas of collaboration in financial services – where the UK already has significant investments in India – eg Aviva, Barclays, BUPA, Equinity, HSBC, Lloyds of London, Prudential, Standard Chartered and Standard Life.

As the Chancellor wrote in the Economic Times during his visit, Britain is “perfectly placed” to be India’s financial partner of choice, helping it to raise the finance needed for its continued rapid growth. This is something that would be beneficial to both sides, and the Chancellor has made this clear in his mantra to, ‘Make in India, Finance in the UK’.

The Chancellor was also keen to highlight the impact of the over 37 masala bonds issued on the London Stock Exchange. Indeed, late in March, one of India’s leading private sector financial institutions, Housing Development Finance Corp, HDFC, issued their largest masala bond, raising some US$504 million (Rupee 3,300 crores equiv), and earlier that same week Mr Hammond, and Mr Jaitley, confirmed a new partnership under the National Investment and Infrastructure Fund, which will look to leverage City of London investment into India’s rapidly growing energy and renewables market.

Away from Delhi, and onto Mumbai, Mr Hammond shifted focus onto India’s growing tech-industry. He met several Indian FinTech start-ups at Barclays RISE before giving a speech at the UK-India FinTech conference. This is an area of great potential for India, and one in which the UK is already a world leader – meaning there is ample opportunity for collaboration.

The discussions on these topics though were of course underpinned by the larger issue of Britain’s future relationship with India, after leaving the European Union.

The mood music around all these meeting has been very positive, with visible demonstrations of common purpose, and certainly sets the tone for future discussions.

Investment is clearly a key part of the UK-India economic and commercial partnership, and the UK India Business Council is pleased that both governments have reaffirmed non-discriminatory treatment of foreign investors and are committed to ensuring an environment in which investors can continue to invest with confidence. A Fast Track investment promotion mechanism was also announced, which provides a single window to help UK companies when establishing and expanding their business in India.

During these visits, the UK India Business Council was delighted to co-host a two discussions focussing on The Sterling Assets Report 2 report with the Confederation of British Industry, and PwC – one with International Trade Minister Mark Garnier MP and the other with Commercial Secretary Baroness Neville Rolfe and Minister Garnier.

Both were engaging sessions at which both Ministers spoke of the importance of a “strong UK-India relationship for the future.” The Ministers were right to look to the future, as moving forward there is so much to be positive about. This is encouraging, as period that has seen the UK formally begin the Brexit process, the UK-India relationship has once again reminded us of the great potential in forging a new, global Britain.

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