The new Labour government will do nothing to damage
Indo-UK relations
Amberish K Diwanji in London
Every now and then the world changes, and nations redefine their relations
with each other. It is for statesmen to seize the opportunities to forge
new beginnings and strengthen old ones. India's economic liberalisation and market reforms, the growing use of English language worldwide, and the globalisation of trade have created a watershed moment with less than 1,000
days to go for the new millennium.
Clearly, the engine of new relations is the surging economic ties between
India and the United Kingdom. The figures speak for themselves: in 1991,
the year New Delhi began its policy of liberalisation, India's total trade
with the UK amounted to £ 1.794 billion. By 1996, it had almost doubled to
£ 3.318 billion. British investment in India is the second highest, after
the United States.
Realising the trade potential, India and the UK initiated the Indo-British
partnership in 1993, when Prime Minister John Major visited India, to
promote trade and investment. Up to £ 8 billion has been invested by
Britain in India and over 800 joint ventures signed so far.
India has moved slowly in liberalising its financial services, including
the insurance sector, but once that is achieved, many British insurance
firms, big names including Prudential, Sun Alliance, Eagle Star, are waiting
to enter the market. A few have already formed alliances with Indian
companies in anticipation of reform.
There is no doubt that British businessmen remain bullish on India. But
for this to become a reality, much has to be done by New Delhi in further
liberalising the economy. Complaints of hurdles to investment remain.
"India is still very bureaucratic and we find much friction between the
central and state governments," said former minister for trade and
industry Ian Lang (of the Conservative party).
A Labour Party spokesman roundly blamed the Tories for the slowdown in
Indo-UK trade. "Exports to India in 1996 grew less than to
France and Germany, and it will be the priority of the Labour government to
push up bilateral economic relations."
Comparing India with China, Granta editor Ian Jack said: "Despite the
common history and language, Indian political instability and slow pace of
reforms is making businessman look at China. China is autocratic and
unpleasant, but it moves fast on business projects." Jack quoted the director of a major shipping company which
lost interest in an Indian deal after it found out it could not sack
surplus labour. "This may be socially right, but since Indian labour
laws are much tougher than China's, it does hurt India's economic
interests."
Swraj Paul, the well-known British industrialist of Indian origin, concurs. "My
company no longer looks at India with seriousness because we have found that little has changed. Bureaucratic hurdles
remain, projects take ages to get approved, whereas in other southeast
Asian countries, it is done extremely fast."
Others, however, take a more positive view. Graham Watts of the Financial
Times predicts that in the long run India would do better precisely
because of its democratic and legal system.
The present situation is strategically different from the past, when the
relationship was based more on the hangover of the Raj. Though the
empire ended in 1947, many of the ruling elite and establishment in India
were Anglophiles, often having been educated in the UK. Prominent historian
Stanley Wolpert has even said that Jawaharlal Nehru, India's first prime
minister, was the last Englishman to rule India! Justices in court would
look to English precedents, and those who could afford it still came to
study in Britain. Pax Britannica was
alive, albeit indirectly.
The same was true the other way round. Many of the elite and senior
officials in Britain had connections with India, either having worked
there, or through relatives who lived or had been born in India. The relation was
one of nostalgia, not of business.
Political differences arose, however. India refused to become part
of the Western bloc, taking the lead in forming the Non-Aligned Bloc and
spending much of its energy in leading the Third World countries in
multilateral fora.
Through the late 1960s, India leaned increasingly towards the Soviet Union,
and India and the UK found themselves often on opposite sides in the
international debate. Through the 1970s, India grew closer and more
dependent upon Moscow, not even opposing the Soviet invasion of Afghanistan
in 1980.
According to a British specialist on India,
the decline in Indo-UK relations reached its nadir in the mid-1980s when Sikh extremism was at its peak. Many of the militants
had support from the Sikh community in the UK, and the Indian government
always felt London was not doing enough to curb their activities. However, this situation began to improve from the late 1980s when the
British government took firm action against many Sikhs accused of terrorist
activities in India, following which Sikh terrorism slowly but
surely died down.
Economically, Indo-UK trade remained low keyed from the 1960s to the end of
the 1980s, as India followed a socialist economy with emphasis on the
public sector and limiting the role of the foreign private sector. The end
of foreign business participation also meant that the large community of
British living in India was drastically reduced.
At the people-to-people level, however, relations remained excellent with
continuing cultural and academic exchanges through the 1960s and 1970s.
Migration from India to Britain had peaked in the late 1960s. The
first-generation migrants kept their links and many of
the second-generation sought spouses in India, thus further cementing
ties with India and Indians. All of this ensured that even at its worst,
India and the UK were on friendly terms.
Yet, changes in the relationship were under way. In the UK, those with
direct links to India have decreased; those in the establishment have few,
if any, links to India which remains only a tourist destination, partly for
sentimental reasons. In terms of education, most young Indians began
choosing universities in the US for courses in technology, medicine,
management, computers, and even for the social sciences. As Ian
Jack points out in the special India edition of his
magazine: 'A Harvard MBA is worth three Oxford BAs in the Indian job
market.'
In terms of popular culture today, the US dominates in India, and the
growth of satellite television is only making it easier to bring
more of America into Indian homes. Music, movies, fashion, technology, it
is the US all the way, at least as far as the middle class and better-off
sections of the populace are concerned. Migration to the UK has come
down, while it remains high to the US. This pattern will remain unless the
US changes its immigration laws.
The emergence of trade blocs in Europe and Asia is a further sign of
change, but this need not weaken links. "Britain is committed to ensuring
that the European Union does not become an inward looking and protectionist
club," said a Conservative Party spokesman. Undoubtedly, the new Labour
government is likely to follow the same policy.
This remains important for many Indian businessmen who see Britain as the
gateway into Europe for suppliers and the transfer of technology. For
Indians seeking to do business in Europe, the best starting point remains
London, with its large financial services sector, as well as the common
language and similar legal system.
Political differences between India and the UK have now
diminished, despite fears that the new Labour government might
hurt India's interest on Kashmir. Diplomatic sources, while unwilling to
be specific, insist the new government will do nothing to damage
Indo-UK relations.
Gautam Sen of the London School of Economics said, "The British are too
interested in the Indian market to let anything like Kashmir upset the
apple cart. Britain has been far more accommodating of the Indian views on
Kashmir today, compared to the hardline stand taken by Harold Wilson in
1965. Sheer economics will dictate a soft political line."
While economic growth is likely to fuel Indo-UK ties, political relations
too need an upswing. India and UK have tended to agree to disagree on
issues such as a nuclear arms ban or on the restructuring of the United
Nations. The previous Congress government also paid little attention to
the Commonwealth, and P V Narasimha Rao did not attend a single
Commonwealth Heads of Government Meet in his five years as prime minister.
Traditionally, India has been closer to Labour than the Tories, though this
may be changing. Labour remains aware of this sentiment, and is trying
hard not to upset the apple cart. Labour leaders have realised the
party's pro-active pronouncements on Kashmir in 1995 made many in New
Delhi uneasy. The party has gone out of its way to emphasise it
will seek to help only if invited by both India and Pakistan, and it
respects the sovereignty of India.
With Prime Minister Tony Blair -- a young man with
many firm ideas on trade -- and India's Inder Kumar
Gujral in the driving seat, Indo-UK ties should continue to
widen and deepen as the two countries go into the next century.
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