Sunday, December 17, 2017

Trade Zone

We want the UK to be India’s partner of choice

 

 

The view of the Mithi, the sooty and sluggish ribbon of water from the top of the offices of the British Deputy High Commission in Mumbai’s Bandra Kurla Complex may not be as eye pleasing as the Thames estuary – and hardly the kind to inspire English poetry.

However, Ben Aldred, First Secretary, UK Trade and Investment,  appears to be as enamoured with the local terrain as the constantly throbbing human energy that resides in it. 

It is easy to put down the fondness to the two years he has been stationed in the country to oversee UK-India engagement in infrastructure and in areas of financial and professional services, but the diplomat – a graduate in Pure Mathematics from the University of Belfast – in a departure from typical British reserve, discloses that the admiration stems from the on the ground evidence of Indian chutzpah.

“Here everyone you meet wants to be in business, and is looking for opportunities to do well in whatever they do,” says the civil servant in a manner that suggests both merit and possibilities on the doing business front for the two countries.

SHRIKANT RAO met the diplomat to derive an understanding of the potential that exists for taking the already existing historic relationship between the two countries to more economically constructive levels.

 

 

 

Briefly take us through your role as First Secretary, UKTI and tell us about your earlier postings?  

 

As First Secretary, UK Trade & Investment I am in charge of our engagement in the infrastructure space, and also in the area of financial and professional services.  So I manage a team across India in all of our various missions. Before that, I’ve done a number of jobs in different places including as Head of Economics and Trade Policy in our embassy in Tokyo for five years. I’ve also done a variety of roles at the UK’s Tax Agency in London, both operational and also related to policy. My career has taken me in different ways, but it’s mainly been focused around technical and economic analysis of policy.

 

 

 

Give us a sense of the current business relationship that exists between India and UK? 

 

Speaking generally, and not just from the infrastructure point of view, I would say we have quite a lot of ambition for the relationship.  It would be fair to say that although we’re doing pretty well, it’s not exactly where we want it to be. We have an internal philosophy: We want the UK to be India’s partner of choice. I choose those words quite carefully. The choice is India’s choice. We want India to want to do business with the UK.

 

 

 

There exists a historical relationship..

 

Of course! And that is why we think it is actually a realistic ambition. Not just because of our shared history, but also the commonality in our legal systems, similarity in business culture, and the incredible links that exist between the UK and India. Large numbers of people of Indian origin, who are British citizens, are taking leading roles in UK businesses. We also have Indian citizens that have got strong links to the UK through education, through work, through having homes in the UK. Also there’s a great deal of fondness in the UK for India and Indian culture, which has come from that shared history. Now, in terms of how that actually translates into business we’re doing all right but it’s not good enough. In terms of inward investment into India the UK is the third largest only behind Mauritius and Singapore. Discounting investments that are for tax reasons, we’re the biggest inward investor into India.  There’s more inward investment from India into the UK than the whole of the West of Europe combined. We have those incredible links, and lot of our companies from the UK are so integrated into the Indian economy that actually people may or may not realise that they’re British.

 

 

 

JCB, for instance...

 

Indeed there are companies like JCB, Hindustan Unilever or even Cadbury, which is part of the Mondelez Group that come to mind. These are classic Indian brands which have very strong links to the UK. We are also now seeing a number of retail brands gaining currency. It’s not just retail but it is also the branding of UK business.  Look at education – UK is still considered an aspirational educational destination and we’re determined to keep it so. So while the relationship is healthy, we do want it to be better.  We’re very strong in terms of inward investment.  We’re not quite as strong as we’d like it to be in the trade of goods and services and that’s why the British Prime Minister David Cameron and India’s Prime Minister Manmohan Singh have set a target that by 2015 we should double the value of trade in goods and services. We’re on course, pushing together and trying to work hard towards that objective. How are we doing this? One is by way of a lot of engagement. Our prime minister has visited India three times, which is unprecedented for the UK.  It really is a testament to his personal commitment to the business relationship. We’re also trying to improve the quality of the engagement of the UK government on the relationship. We know that some people have lost faith over India over the last year or so, but we’re still quite sure about the long-term potential for India, and therefore continue to invest in that relationship as hard as we can. We are absolutely committed to India.

 

 

 

Will you expand on that – is there evidence of movement on the ground?

 

We were very happy last year to see the opening of the UK-India Business Council Centre in Gurgaon in the NCR. Another one will come up in Bangalore in the next few months, and we’re aiming to have a third one opened in Mumbai by the end of this year. The purpose of these centres is very much to focus on the small and medium-sized business, and give them a launch pad to help and advice on this market. We do see a future in linking up British SMEs with Indian SMEs, going into the supply chains and strengthening those. We are not talking just the top line deals, but all the way through the economic strata.  We already have quite a few SMEs that are working in the market. What we’ve observed is some of the most economically important companies are actually SMEs because they bring that little cog that helps the rest of the machine work. We’re doing okay at the big end but we do need to try harder at the SME end to help people with specialist skills and knowledge to come in. It is not always manufacturing. It’s often bringing bespoke, cutting edge services and expertise, also in terms of consultancy. That kind of thing is needed in this market. We’re not expecting large numbers of UK manufacturers to come and export their goods into India.  What’s more likely in terms of manufacturing is working in partnership with Indian companies to build up the country’s manufacturing base.

 

 

 

You see opportunities for SMEs building up along the various industrial corridors and smart cities that are being planned?   

 

Yes, absolutely. The Smart Cities and things like the Industrial Corridors will be very useful to facilitate UK businesses to get into India.  We’re very supportive of all these policies, and it’s really good to see the renewed emphasis on the part of India on manufacturing and provision of infrastructural support for such activities. Now that’s what’s absolutely needed, and all of these measures contribute towards that.  We’re also very keen to support manufacturers coming in. You mentioned JCB earlier. They’re a brilliant example of a UK company that has invested in the long term and is producing a lot of products here in the market, so much so that they’re now producing in India and are exporting their products all around the world. Then we have Jaguar Land Rover, which is now owned by the Tatas and has thrived under their ownership – they’re starting to develop their manufacturing capabilities here.  We have UK companies that are manufacturing largely for the Indian market. So we think there is lot of potential to continue to support those companies. They’re doing all right as they are, but we as the UK government are here to support them and give them any further assistance they need.  That’s the sort of economic relationship we like. 

 

 

 

Can you tell us about the specific areas of current engagement?

 

We are getting a lot of demand from India on healthcare infrastructure. We’re doing a lot in that area and see huge potential. We’re also doing quite a lot in the education sector.  There are a lot of tie-ups between UK universities and Indian educational institutions, but not just at the higher education level. We’re also seeing tie-ups in vocational and English language education.  You might be aware the British Council has a project to help train – actually not train people in English, but train people to become English teachers.  We don’t feel we’re going to be sources of direct training that has to come from India itself but we can help in the training of those who become teachers. It’s an incredibly ambitious target to train 1 million English teachers.

 

 

 

What about the British construction sector – does it have a view on India?

 

Yes of course. In the construction sector, our attention at the moment is mostly focused on design, engineering and the technical skills associated with construction.  We’re not focused on actually building things because frankly, that’s going to be done by Indian companies. What we’re trying to do is bring the latest in expertise to the market, the knowledge of techniques and material that are available so that it could be integrated into various sorts of construction projects that are carried out here, but we’re not going to export concrete from the UK. I can promise you that!

 

 

 

What’s the feedback on the Delhi Mumbai Industrial Corridor road show in the UK? 

 

When we did that event in the UK on the Delhi Mumbai Industrial Corridor very few construction related companies turned up but we had a large number of UK companies that were looking at the wide sets of opportunities that come from the industrial corridors.  We had consultancy services, companies related to healthcare, education, financial services and even some manufacturing companies looking at the opportunities that came out of that corridor, and saying ‘This could actually facilitate our business in India.’  There was quite a lot of excitement coming out of the presentation that they saw from the Delhi Mumbai Industrial Corridor Development Corporation and the one given by the Maharashtra State Government in London. We’re just waiting for developments on the corridor - it is understandably slow at the moment. As it is being built I’m pretty sure a lot of UK companies will look at the opportunities that come out of that zone and from other corridors in India. Actually all of these are opening up opportunities to serve new markets. It is also giving us the facilities we need to establish our businesses here. So it’s pretty exciting. 

 

 

 

So when you talk of opportunities the emphasis is mainly on consultancy. Is that what you’re saying?

 

I wouldn’t want you to get the impression that the UK only does consultancy.  We are particularly strong on consultancy.  When I say consultancy, I’m including the broad range of high level professional skills that an advanced economy needs, so the kind of skills required in construction, architecture, design, civil engineering, urban development and master planning…

 

 

 

So have British firms focused on forming local associations in Gujarat and Rajasthan where a major chunk of the Industrial Corridor work will be done?

 

Our firms are involved in some of the work that’s going on already. We do know for example that that there two UK companies on the Delhi Mumbai Industrial Corridor that have been heavily involved in the master planning process of some of the nodes that have already taken place. What’s going on at the moment with the Delhi-Mumbai Industrial Corridor is that we’re looking at Dholera. That’s the one that’s happening quickest now, but it’s the first of many, and UK companies have been involved in that zone. We’re frankly expecting opportunities for many companies from various countries out of the enormous project within the next couple of months.  .

 

 

 

How are things working for you? Are you engaged with New Delhi on this?

 

Absolutely! I’ll say, for example, on DMIC, New Delhi has its own procurement procedures following the Indian government rules – and we support that. It’s important that these things are procured fairly and we’re engaging in those procurement processes, trying to show the strength these UK companies have and we’re picking up contracts through those procurement processes. There are good companies from other countries too.  

 

 

 

Tell us about the specific projects on which you are collaborating in the infrastructure and construction space?

 

Probably the most notable of that is the Bangalore-Mumbai Economic Corridor and as you’d be aware, this was announced as an area of partnership between the UK and India when the UK Prime Minister came to India just over a year ago. A feasibility study is now taking place on that project which will help define how our partnership will go forward. Our view is not just about saying this is an opportunity for people in Britain’s construction space to build stuff, but actually about wanting the engagement to be far wider than that, so that we can contribute in building of the social infrastructure along that corridor, ensuring that there’s sufficient employment to attract people in that zone, making sure that sufficient education and healthcare comes up there. So the partnering is not just on building a road or a railway line, but ensuring that there’s sustainable development – sustainable not just in an economic sense, but also in an environmental sense. We want to make sure that that development contributes to a better world.

 

 

 

Airports appear to be current flavour in India..

 

We’re looking with great interest at what’s happening in the airport sector. We are thrilled to see that the Navi Mumbai International Airport looks like it’s going to happen. It has sent a very strong signal to the UK’s construction sector that things are starting to move again in infrastructure in India.  We’re delighted to see the beautiful Terminal 2 of the Mumbai International Airport that’s just been opened.  The UK’s been involved in that as part of the consortium and as part of the team to help deliver it and we’re very proud of it. We’re in regular talks for example with the Airports Authority of India so that we can help them deliver their very ambitious program to establish smaller airports. Again, I suspect that that’s something that we will do in collaboration with other countries that have different skills to bring to that programme and we are very happy with that. 

 

 

 

So which are the British companies in the airports sector that might be expected to play a role?

 

All of the UK engineering, master planning consultancies in India have skills that are relevant. I don’t know who is going to bid, but we have world leading companies such as Arup, Mott McDonald’s, Atkins and Halcrow which have a lot of experience in this sector. We also have something called the British Aviation Group which is a trade body essentially in the UK, which brings together companies which have got much more bespoke skills, and some of these are SMEs.  They often work along with larger players to bring specific experience into areas for example airports that are established in places that are slightly more difficult. If you’re building an airport in completely open land which has got no geographic constraints it’s a relatively simple thing to do.  If you’re doing it on a site which has got challenges, which Navi Mumbai International Airport does, that’s when having some of these more bespoke skills will come into play. 

 

 

 

What’s happening in areas like ports and railways?

 

We’re not heavily involved in the ports sector.  We see that as a little bit slower at the moment than airports, in terms of the sorts of things that UK companies would be engaging in, but that’s not to say that we’re not doing anything.

We have some specialist port consultancy companies that are looking at port development but they tend to work with some of the prime contractors on the ports. Railways, is one of the areas where you often see British things behind the label. We do not have a UK rolling stock manufacturer here in India but what you will find is that pretty much every international rolling stock manufacturer is using British technology as part of the whole. So you see a lot of British technology and bespoke skills behind the label.  We have engaged in some railway development in India. So far we’ve been engaged with the Delhi Metro quite extensively on specific projects. We are looking at a number of metro projects here in India because that is one area where we think the UK has got very specific skills. Like for example look at the proposed Mumbai Metro Line III – it is going to be a big challenge to build that, especially when you look at driving through some of the areas of heritage buildings. We think the UK is going to have something to offer there especially in some of the difficult tunneling that would require to be done here. Based on the great experience the UK has in this field I am sure we have a lot to contribute.

 

 

 

What are the projects in the UK from which India, notably cities like Mumbai, can derive learning from?

 

Transport for London who run all of the railways, and are involved in projects like Crossrail and all of the tunneling projects in the UK, could be looking at how they can use some of the things that they’ve learned on driving tunnels through areas that are very difficult in this market. I would also look at some of the other transport projects we’ve had around London.  I’m particularly proud of the London Overground which is a project that has been implemented over the last 10 years in London, using existing railway arteries that are underused and creating new transport arteries along them.

We’ve worked with international partners to deliver a high speed railway line called High Speed I from London to the Channel Tunnel. Now, we’re working on High Speed II, which is our line from London to the North of the UK. Again here we have world-class UK companies and project management and design firms working with international partners to transform the railways.

 

 


Tell us about the emphasis you place on financial services?

 

Financial services is an area which actually I think is the key to unlocking everything because if you want a serious infrastructure project you’ve got to get the finance for that from somewhere. We like to think that the city of London and the wider UK Financial Services community is the best in the world. We have been talking quite extensively with the government of India of ways in which we can use the city of London to get project financing together for various projects. Its early days for those talks at the moment but we’re working quite closely with the authorities here on that.  The key will be for India to collectively to come up with projects which are “bankable”. We need projects to have a risk-reward profile, which will be relatively attractive.

 

 

 

What is the impression an average British investor has of Indian projects?

 

It’s mixed at the moment.  A lot of British investors are keen to get into the market, and there have been projects which have had investment, but I would say underdeveloped at this point in time, and perhaps the mix of risk and reward is not quite there yet, but I do know that the Government of India is working very hard to try and rectify that.

 

 

 

Can you give us an understanding of the countries where British investors are quite confident and feel their investments are secure?  

 

I think you’re asking me a leading question here. It doesn’t really work that way. I would argue there is no such thing as a British investor! The people who have money for these projects, they’re international.  This money is international.  What the UK does is it collects all that together into its ecosystem. Actually it’s not just British money, its money from all of the people who have money to invest around the world.  People are looking at all markets.  There are good and bad projects in every country.  I think you can look at any country and see those projects. 

 

 

 

What are the challenges of operating in this country? What does a British investor, manufacturer – say, a construction firm – expect out of India? 
To put it more bluntly: what are London’s concerns?

 

I would say it applies to all international investors.  People are looking for a stable and predictable regulatory regime, a legal system which gives quick access to litigation.  They’re looking for a business environment where they will not be put into a position where they will have to engage in business dealings that does not fit into their worldwide ethos. 

 

 

 

What’s your outlook for UK India business relations for 2014?

 

We have the elections coming up and we feel that whoever wins the election, the result of the election will give fresh impetus to the Indian economy because everything is a little bit on hold at the moment.  So, we are eagerly awaiting the results of the election not because we have a favorite candidate but because actually we think that once that is established, things will start to motor again here in India. We are ready to pile in and continue to help India’s growth story.

 

 

AREAS OF OPPORTUNITY AND ENGAGEMENT

  • Healthcare 
  • Education
  • Airports
  • Manufacturing
  • Industrial Corridors and Smart Cities
  • Consultancy
  • Urban development
  • Master Planning
  • Design and engineering
  • Technical Support
  • SMEs
  • Financial Services
  • Tunneling projects



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