Prime Minister Modi is well known for sharing his thoughts and ideas directly with millions of Indians through his inspirational "Man Ki Baat". However, for two great democratic nations like India and Britain, with such a deep rooted relationship, there should also be "Dil Ki Baat".
For those of us from UK, with a longstanding interest in strengthening our partnership, I would say: "Yeh Dil Maange More". We really do want more and closer engagement with India and there could not be a more opportune moment to intensify our collaboration, particularly on bilateral trade, investments and capital flows.
Amidst all the noise surrounding Brexit and the triggering of article 50, the nail-biting outcome of the US elections and the vexed issue of migration and visas, let's not forget the fundamentals that now define our relationship.
It is no exaggeration to say that we are at a defining moment in British history as we grapple with the new realities post-Brexit. We stand at a crossroads for the UK and its future relationship with the rest of the world.
As the saying goes: "a friend in need is a friend indeed". I hope that India will adopt this mindset and reach out to UK and recognise both the necessities and opportunities opened up by its negotiated departure from the the European Union.
Unlocking the Trade Impasse
The UK will clearly need to demonstrate some "quick wins" as it seeks bilateral trade deals outside the current EU multilateral framework. Meanwhile, the EU-India Free Trade Treaty is at an impasse where talks have been going on for the past 9 years. I believe this opens up a golden opportunity for India to push both parties hard for ambitious trade deals across multiple fronts.
If you look at Britain’s history it is a trading nation first, last and always – so I am confident that there will be a UK-India trade treaty sooner than one with the EU.
Although an actual treaty cannot be signed until Britain leaves the EU, there could certainly be an interim stage of signing an MOU which can be achieved before then.
However, the UK will be capacity constrained in running too many parallel trade processes and therefore playing "too cute" might mean that the British priority shifts elsewhere.
Investment trumps Trade
Whilst the trade bandwagon gets rolling, the bilateral investment flows will no doubt continue apace, much as it has done during last decade. Indeed, the depreciation in the sterling exchange rate post-Brexit has arguably done more for UK inward investment that any Government intervention or incentives could ever achieve.
At current exchange rates, with sterling reaching a 31-year low against the dollar, Indian companies should find the acquisition of UK businesses and assets attractive, particularly if they take a medium term strategic view which looks beyond the current uncertainty.
Taking this longer range perspective is exactly what Intas Pharmaceuticals has done with it's recent £600 million acquisition of Actavis UK & Ireland, creating a leading generics player in UK. It represents the largest Indian investment into the UK since Brexit and is vote of confidence in the future of the British economy.
The UK and India should focus, above all else, on providing a stable, consistent and predictable business environment. All the empirical evidence shows that inward investment is highly correlated with these features.
Open to Investment but not Migration?
We should acknowledge, though, that the issue of migration has clouded the perceptions about the UK's continuing openness for business.
My personal experience is that Britain is an open and tolerant society which welcomes people from all over the world who can make a contribution to the country. Our new Prime Minister, Theresa May, speaks of making Britain a great meritocracy, a place where advantage is based on merit not privilege; where it's your talent and hard work that matter, not where you were born, who your parents are or what your accent sounds like.
Whilst we witnessed some unfortunate rhetoric and emotions stirred during the Brexit debate, I hope these will subside over time.
We do have to recognise the origins of these sentiments and tackle the root causes - which lies in alienation of people left behind by the forces of globalisation. This is an international phenomenon not just isolated to Britain.
To use some literary analogies from Jane Austen's books, I am confident that Britain will remain the land of "Sense and Sensibility" rather than "Pride and Prejudice".
Boosting Capital Flows
Having spent the last 25 years involved with a number of major global Financial Institutions, I would highlight the important - and still underdeveloped role - which the UK can play in financing India’s economic development.
London remains officially ranked as the world’s number one financial centre. We are home to over 250 foreign banks – more than any other centre. Over 500 foreign companies are listed on the London Stock Exchange and over 40% of the world’s foreign exchange transactions take place in the City. Infact, more US dollars are traded in London than in New York.
UK-based fund managers invest over £6 trillion in assets – almost 5 times the size of the Indian economy which has supported the development of the nascent “Masala Bond” market. Since Prime Minister Modi spoke about “James Bond, Brooke Bond and Rupee Bond” during his widely acclaimed speech at Wembley Stadium last November, we have actually seen London raise USD 4 billion through 32 Rupee Bond issues to invest in Indian infrastructure, making Britain the leading centre. We have also seen HDFC issue the world's first Indian corporate Masala Bond.
However, this is only the start and we have the ability to mobilise further capital and financial expertise: to invest in India’s infrastructure; to issue bonds or equity for India’s companies; to insure their risks -with Lloyds of London having just received permission to operate onshore; to hedge currency or commodity exposures and provide the world’s best professional services network ranging from accounting to legal services. In summary, I truly believe there is no better partner than the UK for financing India’s economic development.
A respected Indian businessman described the UK-India relationship to me as being like a long married couple. We are so familiar with each other that it is easy to take each other for granted - and sometimes we need to find a new spark to revive our relationship.
I hope we can encourage those new sparks and unlock the full potential of the UK-India partnership.
