With Chancellor Gordon Brown set to become prime minister of Britain in the next few days, Britain's economic ties with India are bound to grow stronger.
Brown is hung ho about British investment in India, and is on record as being supportive of outsourcing. Even before he visited India a few months ago, he had done his homework on the country. He wants British business to sharpen its competitive edge in world trade and believes closer engagement with India is one of the ways to do so.
The surveys of all major consultancies and research institutions focusing on Asia - and particularly on India - are now followed closely by most financial institutions in the United Kingdom. The Hindustan Times was told by a corporate head that Dealogic, the financial data provider, has calculated that cross-border transactions between British and Indian companies have touched $33.5bn ( Rs 137,300 crore) in just four months this year, which is more than the total trade in 2006. "India is on turbo-charge," said Lord Bilimoria, chief executive of Cobra Beer, which saw consumption in India rocket 600 per cent over a six-month period last year.
Commerce Minister Kamal Nath had a few months ago told a gathering of senior corporate heads and bankers that old ideas about India would have to be shed. He urged Britons to invest in India or risk being left behind in the global trade. The warning went home. Soon after a high-profile delegation went to India.
Aviva, Prudential and Standard Chartered have all placed big bets on India's growth prospects. Consumer goods companies, such as Scottish & Newcastle and Unilever, have also been trying to tap the emerging Indian middle classes. "The outward-looking face of India has been the biggest change [since the country's liberalisation], as opposed to the old insular, protected attitude," Lord Bilimoria told the Telegraph, London recently.
Gopichand Hinduja gave his views to HT. "Gordon Brown has been presiding over economic policies for 10 years during which the bilateral trade has boomed. He himself was recently in India too and has seen its potential and opportunities. We have now a two-way traffic with £2 billion investment from India in Britian. And that excludes Corus. India is the second largest investor in the UK after the United States." "There are around 500 Indian companies here. I believe that with Brown at the head and his knowledge of India, more positive and encouraging trade policies will follow. Things will be even better," he added.
Dr Mohan Kaul, Commonwealth Business Council director general told HT, "Since climate change is so high on the government's agenda, Brown may like to engage India more than it has in the past. We are also likely to see a strong discussion on how to boost British exports to India. Currently Britain has a trade deficit with India in the bilateral trade in goods that is almost touching £6bn."
The figures speak for themselves. Bilateral trade between Britain and India doubled between 1995 and 2005 - the latest year for which full figures are available - to £7.9bn, but while the overall value of trade is increasing, Britain's share of the Indian market is in decline. In 1991, when the process of liberalising the Indian economy began, Britain's market share of Indian imports was about 14pc but by 2005, that had reduced to a little more than 2.5pc. Many British companies "already have an Indianised presence" as a result of historical colonial links, said Andrew Cahn, chief executive of UK Trade & Investment. More significantly Asian-owned businesses in London have had a turnover of about £60bn a year, while real Asian wealth increased by 69pc between 1998 and 2005, compared with UK GDP up just 23pc.Many of these will soon be looking at spilling over to India.