Maintaining Momentum in a New Era of Economic Cooperation
Maintaining Momentum in a New Era of Economic Cooperation

Maintaining Momentum in a New Era of Economic Cooperation

Chandrajit Banerjee, Director-General of the Confederation of Indian Industry (CII), outlines the various sectors that present tremendous opportunities to bolster UK-India cooperation. Historically linked together for centuries, India and the United Kingdom share a commitment to democracy, peace and stability as also institutional, educational and legal affinities that underpin the vibrant and dynamic bilateral relationship today. As India embarks on a reinvigorated growth path and the UK prepares for a historic detachment from the EU, these shared foundations establish a new era of economic cooperation that extends into multiple domains in alignment with the rapid changes taking place in the world today.

The New India

India has set in motion a range of large-scale campaigns designed to boost the pace of poverty alleviation and growth, as also address gaps in infrastructure and the social sector. The
is the largest financial inclusion programme in the world and has succeeded in opening almost 260 million no-frills bank accounts. The Make in India mission aims to greatly expand manufacturing and job creation through a focus on industrial corridors and parks. The mission includes a range of strategic vectors designed to ramp up the pace of manufacturing growth and create 100 million new jobs. Efforts to improve the
have been undertaken in a focused manner with the cooperation of India's state governments for improving the investment climate. The regulatory environment for FDI has been consistently eased, opening new sectors for participation of overseas investors such as defence manufacturing, real estate, insurance, medical devices, aviation and railway production, among others. In
, a range of new initiatives has led to an explosion in roads and highways construction, power and renewable energy capacities and airport connectivity. The
is scripting a new urbanisation story that will converge physical and digital infrastructures. Equally, the Digital India campaign is driving digital access, electronics manufacturing and e-governance in a multipronged endeavour with remarkable success. Skill India has already brought new capabilities to over 10 million youth from government initiatives, and private sector training is adding to this effort. Each of these areas offers renewed opportunities for future collaboration between India and the UK.

Brexit and India

The UK's decision to exit from the EU is not expected to dent bilateral engagement to a significant extent, given the strong partnership that the two countries have built and their economic complementarities. India's economy is largely driven by domestic consumption rather than exports, and its exposure in terms of exports to the UK is relatively limited. While India may be impacted through second-round shocks emanating from a global financial system that remains fragile, its strong macroeconomic fundamentals, high foreign exchange reserves and lower integration with the world would help to maintain stability in the growth process, analysts believe. CII is confident that
offers positive opportunities for India and the UK to work together. After Brexit, India and the UK could work on a bilateral economic cooperation agreement that could be faster and may aid the process by bypassing some of the sticking points in the India-EU FTA. Further, the UK could consider relaxing its investment regime as it relates to facilitating high-skilled professional labour mobility in order to facilitate higher fund flows from non-EU members, including India.

Bring in post-Brexit Clarity

The post-Brexit scenario in the UK remains inadequately clear for international businesses. While the negotiations commence and the direction of its future role in the EU is addressed, the UK must send out strong signals regarding the potential for Indian companies. One area that needs to be taken up is the contribution of Indian companies in the UK in terms of job creation. We need to resolutely dispel the perception that India, due to its competitive costs, is taking away jobs. Indian companies need to be reassured that the UK will continue to attract and allow the best of global talent for business. In this context, it is important to continue to encourage the movement of Indians to the UK for all purposes, including tourism, higher education, work and business. Higher visa fees, stringent post-study work regulations and restrictive employment permits curtail the gains to the UK from operations and presence of Indian companies and workers. Indian companies will derive comfort from clarity on emerging UK policies on single market access and passporting rights or the right of financial services companies with legal entity in the UK to operate across European markets. The UK must take care to avoid excessive restrictions on business operations from within its borders to the larger EU market.

Considering an India-UK trade/economic cooperation agreement

India and the UK have the opportunity to commence on a bilateral trade agreement or comprehensive economic cooperation agreement. This should include trade in goods, trade in services, investments, mutual recognition of certifications and so on. Such a treaty would open up larger avenues for partnership. While formal decisions cannot be taken until the UK completes its exit process from the EU, an initialising discussion could at least bring forth key elements that would be crucial for such an agreement to materialise.

Going High-Tech Together

Today, India is progressing rapidly towards a knowledge-led, knowledge-driven economy. Our youth is increasingly internet-connected and tech-savvy. Combined with their innate sense of creativity and entrepreneurship, the young are leading the change to a new India. Frugal engineering, innovative thinking and tailored solutions are the hallmarks of the new knowledge economy in India. The UK enjoys leadership strength in technology and innovation. It has much to offer to India, as also much to gain from partnering with it. The two countries would need to jointly address policy instruments in order to maximise the gains from their partnership.

Partnering on Smart Cities and Urban Regeneration

India's Smart Cities Mission is meant to usher in a new era of urbanisation. The UK has committed to developing the smart cities of Pune, Amaravati and Indore. With these lighthouse cities, new areas of cooperation will be created in the overall trade and economic relationship. The UK has expertise in infrastructure, smart transport solutions, professional services and e-governance. It is a global leader in design, spatial data analysis, modelling and visualisation. The UK firms supply a range of innovative, user-focused design systems to the world and can expand their presence in India's rapid urbanisation process. A concerted effort to connect companies with opportunities in this sector could have wide-ranging and wide-scale implications for India-UK economic relations.

Conclusion

The future of India-UK relations looks strong under the leadership of the two prime ministers and has acquired a positive glow of new opportunities. Enterprises of both countries are keen to maintain the momentum and build closer economic synergies. This gains from the leading position of the UK in the evolving knowledge economy, as also from India's renewed growth vigour. The future strategies can converge with India's development mission and the new synergies between the governments and businesses of the two sides would stand as a paradigm of partnership.
The above is a synopsis of one of the chapters from ′Winning Partnership: India-UK Relations Beyond Brexit′, edited by India Inc. Founder & CEO Manoj Ladwa.
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