THE state visit of Indian prime minister Narendra Modi to Britain has raised hopes in the business community that it will enhance the trading relationship between the countries. The hope that the bucks follow the pomp is pretty well established in corporate folklore.
Modi’s meeting with David Cameron was strikingly similar to Chancellor George Osborne’s visit to China recently – skirting delicate political issues in the hope of drumming up trade. It can sometimes feel distasteful. Modi was shunned by Britain and America for many years when, as chief minister of the Gujarat region, he failed to deploy security forces fast enough during a riot to save more than 1,000 Muslims from being killed.
But, even on strictly business issues, it could be that our industries are disappointed in their hopes for a speedier dismantling of the hurdles they face in opaque and administratively labyrinthine India, which can give the impression of being a civil service with a country attached.
Edinburgh-based Cairn Energy, for instance, has particular reason to hope Cameron has done some polite arm-twisting in private on the $1.6 billion retrospective tax bill the company has been hit with there. It relates to its former subsidiary Cairn India, but has now been going on for 22 months.
The Scottish group, which claims it has paid all due taxes, finds it galling that the tax demand came after it contributed $1bn in revenue to India’s national and state coffers between 1994 and 2011, at which time it sold a controlling shareholding to Indian energy giant Vedanta.
But 22 months is a veritable whistle-stop tour in terms of India’s notorious inertia in sorting out issues with international investors.
Just ask the Scotch whisky industry about the interminable on-off discussions on the fabled European Union-India free trade agreement, a business and diplomatic version of Waiting For Godot. Currently, the talks are off again in a tit-for-tat action after the West turned the regulatory screws on some Indian drug companies.
It is said that Modi is business-friendly. But which leading politician would consider positioning themselves publicly as anti-business, with the exception that proves the rule of Jeremy Corbyn?
Nobody doubts the prize is great. India is the world’s biggest democracy and on purely demographic grounds a potential El Dorado for British investment. Insurers are particularly entranced by the possibilities of flogging life policies there. And other services’ sectors would like to follow.
Meanwhile, Indian investment in Britain is important (even if Tata may now have regrets in buying up the old British Steel in these fraught times for that industry). But others are also beating a path to India’s trading door. Forgive the pun, but it has become the modish thing to do. Britain will have competitors for the Indian PM’s ear. «