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India to rule economic world in coming years: Tory MP

Tory MP Peter Luff said India and China are set to rule the economic world and Britain needs to engage with India.

india Updated: Dec 27, 2003 23:17 IST

In a few years India and China will rule the economic world and Britain needs to engage with India, said Tory MP Peter Luff at a House of Commons debate on Wednesday, and added that outsourcing jobs to India is a challenge to British economy, not a problem. He called for the UK to drive up skills to compete in the globalised economy.

Luff, who is also the Chairman of Conservative Parliamentary Friends of India and MP for Mid Worcestershire, said: "We have nothing to fear from the process. We must regard it as a challenge to address honestly and openly, and if we do, India and Britain both gain."

Luff told MPs that "India is changing fast, and those dramatic developments surprise those who are not familiar with the country. In a few years, India and China will rule the economic world. We need to understand that reality and adapt to it. We must not try to resist it. We need to engage with India, not to treat it as a problem."

He made his comments at a debate initiated by the Liberal Democrat MP, John Barrett which had expressed severe reservations about the transfer of call centre jobs to India. Barrett represents Edinburgh, West, the city which along with Glasgow has lost a large number of call centre jobs to India.

Luff also made a significant point which is being overlooked by critics of outsourcing to India is the investment India is making in the UK. He said: "What is more, Indian businesses are investing heavily in the UK, including in a call centre in Belfast, and generating jobs in many other sectors too.

Luff stressed that it is in the interest of British companies and in the self interest of the UK to transfer jobs to India. Praising India's IT sector, he said: "Indeed, the openness of the IT sector in India stands in stark contrast to the many sectors that are still too heavily protected, particularly the retail sector. The success of IT in India is an exemplar to the Indian Government and the Indian people, showing that free trade can bring real benefits; it has been responsible for driving the liberalisation process in India."

Conceding that an ever-growing number of jobs are moving to India, Luff denied it was a problem. He said: "I concede that it poses a challenge to the British economy, but it is not a problem. That is a big difference. As the Government have said, we need to drive up skills in the UK to enable us to compete in the globalised economy."

In praise of India, he said: "There is a mythology about India. People say that it is has a low-skill economy. That is not so; highly skilled jobs are now going to India. For instance, Indian bankers are returning from New York, where they earned £500,000 a year, to work in Mumbai; they are on lower salaries but have a much higher standard of living because of the country's low labour costs."

He said that for years Britain's "monstrous" agriculture policies "forced India to export agricultural jobs. For many years before that, during the time of the British empire, we forced India to export its manufacturing jobs to Britain. The boot seems now to be on the other foot."

Barrett, while expressing his reservations about outsourcing jobs to India, had pointed out that Tesco's chief executive, Sir Terry Leahy, had spoken about investing in India. But Sir Leahy had also said: "Indeed, by remaining competitive and innovative, we will create an additional 13,500 jobs in the UK this year, and over 2,000 jobs specifically in Scotland." Luff added: "Businesses cannot just stand by and watch their global competitiveness being eroded," and stressed on the benefits of cost saving, while adding that Britain is gaining from outsourcing of call centre jobs from the European to Britain.

Pointing specifically towards Scotland, Luff noted a report by Professor Phil Taylor of Stirling university and Professor Peter Bain of Strathclyde university which said that "Scotland has had a net growth of 10,000 jobs in call centre employment during the past three years, while in the same period, the number of call centres in Scotland grew from 220 to 290. Of those approached by the authors, 92 centres said that they expected to add more jobs by 2006. Doom and gloom should not be preached. The job losses always make the headlines, and the successes are often ignored.

First Published: Dec 25, 2003 21:33 IST