An Analysis Of Prime Minister Modi’s UK Visit

India and United Kingdom represent shared modern democratic institutional heritage, economic interest and strategic vision to cement a sustainable win – win partnership.

India and United Kingdom represent shared modern democratic institutional heritage, economic interest and strategic vision to cement a sustainable win – win partnership. Around 1.6 million influential British Indians have been engaged by the new dispensation to supplement Prime Minister’s effort in ensuring global respect for Indians by showcasing myriad domestic efforts taken by the government and opportunities that lie in store for United Kingdom to boost it’s economic growth.

What have the efforts yielded?

The efforts taken by the government have helped India leapfrog 12 ranks at one go in World Bank ease of doing business ranking, and a spurt in FDI(Foreign Direct Investment) to First Develop India( FDI) by 40 %. Acknowledging Indian efforts IMF declared India as a bright spot in the global economy. A day before the visit FDI(Foreign Direct Investment) was liberalized in 15 sectors ranging from defense, construction, to as wide as plantation. For instance, in the defence sector as stated in this report, the proposals for FDI up to 49% will now come under the automatic route instead of the government route as under extant rules.

This will boost Make In India in defence. Make in India in defence will create jobs , and reduce the import bill. In the long term , manufacturing defence equipments in India will suffice India’s strategic concerns. Further, as per a livemint report liberalization of the FDI regime in the construction sector has the potential for yielding a considerable windfall, boosting real estate sector. Real estate sector will energize demand and catalyse job generation.

 How can United Kingdom benefit India?

United Kingdom should take advantage of policy driven governance, and a liberalized FDI regime in India through its expertise in manufacturing; particularly defence, renewable energy and financial sector capital mobilization. This FDI(Foreign Direct Investment) from United Kingdom will undoubtedly support the increasing public investment in spurring consumer demand and create positive conditions for private domestic investments, albeit FDI contributes less than 10%GDP(3.5% to be precise).

It will bring with itself world’s best practices and access to technology. It will induce greater competition in the Indian markets and help it integrate with the global supply chain. Indian market provides opportunity to United Kingdom to boost its dwindling economic growth, and send out a welcoming message to a large and growing British Indian electorate. Prime Minister Cameron rightly acknowledged this at Wembley when he said “ Britain one day can have an Indian origin British as it’s Prime Minister”. In this win – win partnership India will benefit through expansion of skill employment opportunities for 800 million Indian youth (below the age of 35), and a burgeoning middle class.

Specifics from Prime Minister’s Visit

These potentialities seemed to be actualised on the first day of the Prime Minister’s visit to the United Kingdom. Pacts worth 8 billion dollars, particularly in defence and manufacturing were inked. Finalization of the civil nuclear energy agreement necessary for a clean energy future for an energy hungry Indian economy. Going into Paris, the deal is positive omen for success of climate change talks. On the trade front, India and United Kingdom announced pacts worth 9.2 billion pounds.

HDFC realising the growing depth and closeness between India and United Kingdom, distinctly after the response to Prime Minister’s first day in London decided to list the rupee denominated masala bond on the London Stock Exchange. Progressively London will be the centre for off-shore rupee trading with the launch of 1-billion worth of bonds, including the first rupee-denominated bond.

Prime Minister also highlighted India’s plan to use London as a financial base for fundraising and the launch of railway rupee bond in London. This will help railways improve it’s balance sheets, raise resources to improve passenger amenities, modernise coaches and increase the connectivity across length and breadth of the country. As India builds partnership with nations(Prime Minister having travelled 30 countries till now) to create opportunities and increase the prosperity of it’s people(eliminating poverty first), United Kingdom can utilise these opportunities especially in Make in India , smart city development , renewable energy and nurturing the ever increasing start-ups in the country.

Security Concerns

The United Kingdom though needs to take concrete steps to allay Indian security concerns. United Kingdom can signal it’s seriousness by acting on the dossier handed over by India. United Kingdom should not allow its territory to be used for imparting anti- India ideological doctrines by Sikh Radical groups. Shared security interest in stabilising nations in India’s neighbourhood can be realised when mutual security concerns are respected to build trust.

Conclusion

The Prime Minister‘s foreign visits have repeatedly paid dividends by increasing investment to create jobs for the youth. While his visit to United States opened the door for Boeing to begin its first major flight in a joint venture with Tata in India creating direct and ancillary jobs, United Kingdom’s visit will help develop Indian financial markets in skilled operations and realise boosting manufacturing growth contribution to 25% of GDP. This will help employ the youth , and utilise the demographic dividend boosting demand ,which will feed onto an efficient supply to act as catch up .

However, for full realisation domestic action on the tax front, bankruptcy law evolution and a national IPR policy need to be implemented. Particularly on the tax front, though indirect tax collection has increased by 36% in the current financial year, moving from 1970’s legacy of enforcement to compliance mode needs to be carried out.Implementation of Goods And Services Tax has to see light at the end of the road. Consolidation of all FDI related documents at one place to avoid countless government notifications is welcoming , but root causes grounded in FEMA(Foreign Exchange Management Act),1999 should be resolved. Executive intention should be backed by consultative legislative engagement and action.

This is a must as Prime Minister Modi and his team are expanding India’s economic and strategic space for benefit of Indian households. His critics should not thwart such an outcome for India’s sake. For those wanting India’s progress it is clear, support Prime Minister and his team in well intentioned progressive steps to take the nation forward, because irrespective of individuals governing, India should move forward.