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Osborne in India

Stephanie Flanders | 09:23 UK time, Wednesday, 28 July 2010

Mumbai: It rains a lot in Mumbai in July. Sheets of rain. Frequently, and without notice. I'm here with the chancellor's delegation and no-one has brought an umbrella. It goes with the general theme of the trip: go with the flow.

Pedestrians in the Mumbai rainThere will be no lectures, no talk of poverty, or human rights - just business, pure and simple. Except, business with India is never simple, as George Osborne is discovering.

Strip away all the happy talk about a new special relationship and there is a hard commercial logic to the government's Indian charm offensive this week. You will be bored by me saying it, but for George Osborne's deficit and growth plans to work - in other words, for his entire economic strategy to work - UK firms are going to have to export a lot more to the rest of the world in the next few years, ideally to the parts of the world that are taking off.

His favourite fact is that Britain now sells more to Ireland than they do to Brazil, Russia, India and China combined.

How much can this trip do to change that? Well, Mr Osborne may be right that we start from a stronger position here than we do with Brazil, say - or Russia. There are plenty of ties between the two countries, and they're not all historical.

One of his first stops in Mumbai on Tuesday was Bombay House - the 80-year-old headquarters of Tata Industries. It has probably bought more British-made goods in the past few years than any other company in the world. Alas, not in the form of exports.

As a result of buying Tetley, Corus, Jaguar Land Rover and the rest, Tata is now the single largest manufacturer in the UK. But, with some exceptions, British firms have found it harder to go the other way - perhaps because the sectors they excel in, like retailing and financial services, are the parts of the Indian economy that are still most closed to foreign companies.

Our exports have not kept up with India's tremendous growth. We used to be India's fourth largest source of imports; now we're around 18th.

I asked R Gopalakrishnan, the Executive Director of Tata, whether there was a chance that UK retailers and bankers could get a better foothold in India. He was surprisingly honest: there were indeed barriers to the Indian market for any foreign company in these industries, and those barriers were not disappearing any time soon.

He said he thought the British were pinning too much on services as a way of paying their way in the world. We should get back to our "special skills", in engineering and infrastructure; and those were certainly skills that India was going to need.

As it happens, Mr Osborne also says he wants Britain to get away from what he calls the business model of the past 10 years, where, among other things, the UK put too many of its eggs in the financial sector basket. But you can't help noticing that all the UK businessmen with him for this part of the trip are from the world of finance: the likes of Peter Sands, of Standard Chartered, and Xavier Rolet of the London Stock Exchange.

Then again, you deal with the hand you've been dealt. And this week people here say that one of the most constructive contributions that Mr Osborne could make to British business interests is to lobby senior Indian officials to support legislation currently bogged down in parliament, which would raise the cap on foreign investment in an Indian insurance company from 26% to 49%. Of course, a key beneficiary would be Standard Chartered.

George Osborne with Vodafone phoneMr Osborne's other big public event on Tuesday was launching a new solar-powered phone at a Vodafone shop in downtown Mumbai. He says he chose Vodafone because it demonstrates what British companies can do in India where there is free competition. Since buying an Indian telecoms company in 2007 the company has become the country's number two mobile provider, with over 100 million subscribers.

But Vodafone is also reaching a crucial time in a highly public dispute over $2.6bn in taxes which the Indian tax authorities insist are due to them as a result of that 2007 deal. A Mumbai judge will start to hear evidence from both sides next week. Rightly or wrongly, many at the event saw Mr Osborne's presence as a calculated show of support.

However you look at it, he and his fellow ministers are here banging the drum for British business - something which they say the last government didn't do enough. The message of this week is that the old-fashioned trade mission is back (though I don't remember the trade missions of yesteryear featuring Olympic runners and senior officials at the British Museum).

But, awkwardly enough, the Conservatives also fought the last election on the view that Labour had permitted too much immigration. Their plan to cap the number of immigrants to the UK from countries like India isn't going down well here at all.

"There's a Jekyll and Hyde quality to our dealings with the UK which pre-dates this government", one very senior Indian executive who spends a lot of his time in Britain told me.

"When it's the man in charge of getting you to invest in Britain, it's all smiles. But when you're talking to the official in charge of letting your people into the country, it's a whole other story." This man fears the new cap on the number of migrants from outside the EU will hurt relations, even if most big companies can still - eventually - get the people they need.

It's a small issue, in the broader scheme of things. But it goes to a larger point. Mr Cameron and his colleagues say a mature relationship with India will be a game of give and take. That's what this visit is all about. But when you look at what the rest of the world has to offer this new economic powerhouse, you have to wonder whether Britain needs more from India than our new government is willing - or able - to give it in return.

Comments

Page 1 of 2

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    Slash and burn in public expenditure is not going to create the conditions for building up our export potential whether it is to India or anyone else (except the Irish) This includes academia both in terms of exporting our knowledge and expertise but also in terms of research and innovation. No mention of Vince Cable's off message remarks on immigration?

  • Comment number 3.

    India will trade with Britain if we have something it wants, same goes with the rest of the world. So, it's down to us to get on with producing great products that the world wants and worry a little less about the politics and image. Britain is an important market for India so it is in their interest to keep us sweet too.

    Nothing wrong with Peter Sands being there Standard Chartered is a good bank arguably the best we have.

    With regard to rumours about disagreement in the coalition - big deal all governments have rifts and factions - Blair-Brown was hardly a love in. It's getting as tedious as hearing about the changing fortunes of Jordan's love life. Bring us the news when a real split happens.

  • Comment number 4.

    Regarding Indian officials / State opinion on the UKGov suggested cap on the numbers of non-EU immigrants - migrants with skills that are in short supply / increased demand that cannot be sourced from the existing UK population should be made welcome, allowed and encouraged. This should not be confused with allowing migrants enter the UK with skills that are already abundant but are simply 2, 3, 4 times CHEAPER than an equivalent UK national with the same skills.

  • Comment number 5.

    Well done George! Try and have a nice time!

    When you get back can you explain to us how India operates draconian economic 'protectionism' in every aspect of of its economy and why British firms and entrepreneurs will never be allowed to purchase assets and operate businesses in India as openly and as unrestricted as Indians are allowed to do this in the UK.

    A learning curve for our Coalition government ... Yes ... Global trade is very unfair but what is or can the Coalition government going to do about it?

    Nigel Farrage got it right today on BBC Radio 5 live - our UK coalition government is prevented from reaching any new trade agreements with India - owing to EU law preventing this.

    The UK is effectively 'trapped' with massive structural global deficit trade problems. The UK is stagnated until we are set free of the bureacracy and government created 'structural/ bureacratic/ and other problems' that restrict our UK business creativity and performance.

    This is where the Coalition government are still weak at the moment (but still further ahead than their predecssor UK government) in terms of understanding and indentifying these structural and other problems.

    Yes Messrs Cameron, Osborne and Cable ... it is called 'protectionism'. What, if anything, is to be done about it?

  • Comment number 6.

    What is the point of Cameron and Osbourne going round India tring to build commercial links when they have no real idea about what they are trying to achieve. If they want to start anywhere then they should be demanding of the Indian government what their plans are for addressing the trade imbalance - the continuation of which is not in the best interest of either country in the long term.

    However, whilst the western economies continue to demonstarte a lack of ability to develop some truly joined-up thinking then the ability of China and India to exploit the opportunity will continue.

    For my part, it is pleasing to see more contributors exploring the positive elements of protectionist policies. As the above article makes clear it is clear that in India protectionist policies are employed.

  • Comment number 7.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 8.

    http://in.reuters.com/article/idINIndia-43127920091013

    and

    http://www.risklatte.com/BraveEconomist/09.php

    quote from the article...

    'is it possible that the Feldman-Mahalanobis model of economic growth, on which India’s five year plans were based since independence was after all the correct one for India; it is just that it took 60 years to pay off? '

    .............................

    Yes it is possible ... and this is how it works ...

    'The model posits that to reach higher standards of consumption and bigger growth in the consumer goods sector one must first stimulate the capital goods sector by channeling more investments in that sector. An economy has to build up capacity in the production of capital goods before concentrating on the consumer goods sector. In the short run, the capital goods sector matter. However, in the long run increased capacity in the capital goods sector expands the capacity in the production of consumer goods.'

    ..............................

    India is not where it is by accident ... radical free thinking about the productive capacity AND STRUCTURE of its economy has propelled it forward to where it is now

    Let's hope Britain's trade delegation finally gets some understanding here and takes up the initiative for some painful long term planning and fundamental 'roll up our sleeves' grass roots changes in British industrial and manufacuring policy. Britain is not India and an excact same version of the FH growth model will not necessarily work here in the UK ... but a new version based on 'green GDP' and measuring long term UK sustainable growth would be beneficial in the short medium and long term to Britain.

    India made itself into what it does by learning how to produce more than it imports ... we now need more than banking and the City of London to lift Britain out of stagnation and depression.

    In the UK our 'GDP' is really Gross Internationalised Product (GIP) and what we really need is a new UK 'growth' model based on 'Gross Sustainable (Green) National Product' .... 'GS(G)NP'

  • Comment number 9.

    Our exports to India are growing massively. Unfortunately its jobs in the IT sector. Net result is that jobs and salaries are flowing out of the UK economy. These salaries are not going into the UK economy and the tax/NI that would have been paid on those UK jobs is not going to HMRC’s coffers.

  • Comment number 10.

    if India is such a prosperous and influential country given the points discussed in your piece. please may I ask why as a country we are continuing to support if with Government aid?

  • Comment number 11.

    If the Medical Schools at the 32 Universities in the UK., which teach Medicine, didn't have the current policy of allocating approximately 50% of the places to NON UK. domiciled students,we wouldn't need to depend upon India and other such countries for Doctors to help support the NHS.
    The shortage of Doctors is just one simple example of where successive UK. governments have allowed our Universities to operate this policy,simply based on the fact that Overseas Student fees are £20,000/year compared to UK. nationals paying £3,000/year.
    What a shambles!!!
    Rgds, Gordon Hutchison

  • Comment number 12.

    It is good to see the UK look further afield then the US and Europe for trade ties. One may well lament the end of the commonwealth as a trading body. However we can not expect the UK to be lead out of recession by any of the emerging nations. They currentley need us more than we need them. China and India need exports and are looking to the west to deliver.

    Let us not fool ourselves we need to put our own house in order first. For if we just paper over the cracks as some are suggesting then it is likely that the whole building could end up collapsing.

  • Comment number 13.

    Stephanie, please, for once, mention how important tourism is to these developing countries.

    In India, for example, tourism is the largest service industry. The industry could benefit from British knowledge of running such a large and diverse industry.

    Those with "mickey mouse" tourism degrees can share their knowledge of the politics, economics, environmental impacts etc. of tourism.

    The third world is more often than not blessed with areas of outstanding natural beauty. It is this resource they need help with exploiting so that it achieves its maximum (low environmental impact) potential.

  • Comment number 14.

    UK financial services will have an extremely difficult task if they want to set up a base in India. The policies support the internal banks too a great extent and also control monetary flow to a greater extent which actually protects a recession-like state to a great extent. Barclay's tried to establish themselves in India but were not allowed to get into banking.

  • Comment number 15.

    UK does not have the same manufacturing skills as say Germany or Japan, so that has to change plus anything other thank high quality/specialist goods will seem expensive in India (or China). Also even if the markets open up for investment in retail or insurance or banking it will not create jobs in the UK (it might make some investors rich in the long term but very little jobs in the next 5-10 years say).

  • Comment number 16.

    From the previous blog;
    177. At 11:04pm on 27 Jul 2010, Richard Dingle wrote:
    I know the NHS well enough to know it needs a period of stability. I also know it has significant step improvements in recent years.
    =========================================================================
    Apart from the work I have done with the NHS over the years my wife has worked in the Health Service all her career. She asked what significant improvements are you referring to. Do you mean the targets. Many of which were only achieved by slighte of hand and smoking mirrors. In the Trust where she is currentley they have lists to get onto lists. They have introduced a waiting list for each step of many of the procedures. This just gave them buffers and enabled them to achieve the targets set. A&E for example, the time taken from entering the department to leaving has actually gone up, however you are seen by a triage nurse within the allotted time, you just then have to go and wait in the next line for the next step in the process. They have drawn lines in corridors and given them a ward name and location so you are no longer waiting in corridors. She is the first to admit that there have been improvements but all too often they are in the infrastructure rather than in the processes and procedures.
    =========================================================================
    'We are currentley waisting millions if not billions'. A myth. If not show where and how.
    =========================================================================
    I myself have knowledge of at least two hospitals which have been built in the last couple of years and who's design was such as to allow them to be converted for other use. The justification for one of them was that it was a transition move from closing down a hospital and getting the locals used to travelling to another hospital some 6 to 10 miles away. From the day that hospital was opened it was under review.

    My wife will tell you bluntly that since 1997 there has been an upsurge in staff, unfortunately the majority of them have been on the admin side. In 1997 there were around 1 million employed in the NHS. Now there are over 1.5 million. In her trust alone she has seen over that period an increase of some 35% in managers, that number rises into the high 40's if you include all the administrators. Clinicians are now even tasked with carrying out more administration tasks than ever before.
    This all costs and is viewed as waste by the clinicians.

    We then have the great new hope - the new IT system which was going to all things to all men. Well if you asked my wife was it a good idea, yes. Has it been handled well, no. It has been a disaster. Point one, we have a single NHS in the UK why split up the development and delivery of such a system. Not only into regions but also delivered by different companies using different software. Does this seem to make sense to you. What ever was learned in one area was not shared with the others. Problems and issues were not shared. And the cost, well that has spiralled out of control. And what have we got so far, a system that does not work with features that are not appropriate.
    This has cost and is viewed as a waist by clinicians as well as politicans.

    And I quote the Times from last December;

    "The Chancellor said the “quite expensive” programme, which has been running since 2002 and has an estimated budget of more than £12.7 billion, could be postponed to save cash.

    Mr Darling told The Andrew Marr Show on the BBC: “It is necessary for me, on Wednesday, to indicate areas where we are going to cut spending and where we are not going to spend as much as we were.

    “For example, the NHS has quite an expensive IT system that, frankly, is not essential for the front line. That’s something we do not need to go ahead with just now.”"

    So is that enough proof or do you want more?

  • Comment number 17.

    Why do you not mention the EU/India Free Trade Agreement, being fast tracked by the Trade Commission, but not mentioned in this trip, strangely.

    Surely it is your job to make the connections. Or don't you know about it? There are certainly accountability issues for the BBC too!

    The one thing that India is demanding in this trade agreement is access for transnationals, like Tata, to bring in cheap workers to the EU (and obviously mainly the 'liberalised' UK). That will be a permanent, irreversible commitment. But Cameron is not mentioning that dimension and the BBC is asking no questions about it. why not? This is what we pay journalists to go and do.

    Someone needs to think a bit harder about what 'trade with India' means, instead of swallowing the glib PR.

    Services trade is primarily about investment, including that associated with cheap labour, the main cost in providing services. So even if investment openings are achieved, it DOES NOT MEAN ANY JOBS for poe,l in the UK. Meanwhile, though, many UK workers are displaced from jobs as Indian transnationals, and indeed any transnational firm e.g. RBS with establishment in India, brings in cheap labour.

    No one in the fianncial servcies entourage (which is transnational anyway - nothing UK about that) - or any ConDems are going to be concerned with UK jobs. So who will speak up for UK workers? Is it too much to ask that someone from the BBC (that workers pay to ask the questions and deliver the information) will notice that that side is not being explored, or mentioned and will address that gap?

    Cable is best mates with Iain Valance (Lord) who led the lobbying on behalf of financial services, that ensured that the EU offers labour acccess in all its trade agrements, as well as seeking investment opportunites, on 'the other side' of the negotiations. Cable, in that sense, is a plant.

  • Comment number 18.

    "Our exports have not kept up with India's tremendous growth. We used to be India's fourth largest source of imports; now we're around 18th." And I thought Stephanie was smarter than this. the value of our exports may well have increased in line with Indian growth; all this stat tells us is that they are importing stuff we don't make or have - such as vast quantities of raw materials/foodstuffs from places like Australia, Qatar or military equipment from the US and so on.

  • Comment number 19.

  • Comment number 20.

    Osborne in India

    Dear Stephanomics - I read with interest about the undercurrents of "obstruction" perceived on both sides of the India/UK trade discussions.

    A friend who has a home in India (for more than 20 years) is struggling to get a visa renewal to allow him to return "home" after a brief return to Britain. I am a believer in a lot of conspiracy theories: this is probably one, and it's a tangled web with which the bureaucrats can play games.

    Informative piece. Thanks.

    WolR

    (P.S. Despite the seriousness, I couldn't help thinking that it might be a case of "tit-for-Tata"..! -- if not moderated out).



  • Comment number 21.

    Can my fellow workers in the UK IT industry please have their jobs back.

  • Comment number 22.

    We export to India though a JV which is 50% owned by us and 50% owned by an Indian national. It was founded in 1995 and although it has started small it is the fastest growing part of our business and is now becoming a significant part of our business.
    I believe that the reason why we have been successful is twofold - firstly finding the right partner in India to do work with and building up a long term relationship based on trust and secondly having the right high tech / high added value products to sell.

  • Comment number 23.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 24.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 25.

    Talk to any person working in the IT sector and they will confirm that everything about caps are just "promises" which dont take place.

    For the last 3 years i have been working in UK companies with more than 60-70% of onshore employees which are from India. If i take into account the offshore employees the percentage is even higher.

    Now if you add into the equation that some of the people working here had not got any basic knowledge of IT, then i am wondering why are they allowed in the country and why dont the companies use a corresponding UK/EU graduate?

    Perhaps the companies are looking for profit only, so i am not sure that Cable/Osborne will do anything different..

  • Comment number 26.

    Why sell services to India. We sell banking, retail, we create jobs in India, we sell products made in UK we create jobs in UK.

    UK has a very able high technology sector, however an average engineering PhD gets less salary than a GCSE pass banker.

    Lets promote making things and not just trading

  • Comment number 27.

    Definitely India needs support in developing infrastructure and if UK will not be mild on immigration, we need to remeber that world is an open sky and many other countries are keen to take on the swelling indian market. So an early move to strengthen the business relations and capturing the most from export or investment perspective is the key in the recovery of UK economy and not by harpeing on the past.

  • Comment number 28.

    #21. At 12:18pm on 28 Jul 2010, The Gosport One wrote:
    "Can my fellow workers in the UK IT industry please have their jobs back."

    £1.75 an hour OK?

  • Comment number 29.

    "There will be no lectures, no talk of poverty, or human rights - just business, pure and simple."

    yes, because businessmen don't like to talk about that it's responsible for - only what it can get out of the situation.

    What is noticeable is that whilst acres of copy has been written about this trip - the Indians haven't even noticed the arrival of this 'biggest delegation in years'.

    Are we looking to be someone else's poodle now that the US has decided we're 'surplus to requirements'?

  • Comment number 30.

    India is a perfect candidate for the next special relationship. A formal colonial power (like America), that has a massive population (like America), that has lots of land / natural resources (like America), doesn't mind a war with Terrorist neighbours (like America), who has a culture that heavily influences ours (like America) and will be cash rich in a the near future (like America a few years ago).

    So lets join with the 1bn Indian people, enjoy our currys and fight with Pakistan. Its alot easier and acceptable than China.

    Hang-on, didn't we say the same things about China 2 years ago?

    http://news.bbc.co.uk/1/hi/uk_politics/7194864.stm

  • Comment number 31.

    3. At 10:29am on 28 Jul 2010, StartAgain wrote:

    "Nothing wrong with Peter Sands being there Standard Chartered is a good bank arguably the best we have."

    That's not saying much.

  • Comment number 32.

    #29. At 1:23pm on 28 Jul 2010, writingsonthewall

    Lunch hour eh? :)

  • Comment number 33.

    Finally the politicians have understood the need for diversification in our economy. The problem with that is the return on manufacturing is very low so "the city" is unlikely to invest in British manufacturing. To offset this we need to set up a specialised "Manufacturing Bank". Also to have special manufacturing tax rates and to increase investment into Britain to require that "the city" invest a certain percentage of its profit into manufacturing.

    The market will not do this for us and other countries are doing similar things to develop and support manufacturing, not only for wealth creation but also to provide a diverse job base. Not everyone can be an investment banker.

  • Comment number 34.

    Why dont we just send our insurance companies in and start charging all the tuk-tuk drivers absurd amounts of insurance, we could also charge for parking permits and green taxes for not being eco friendly enough, fine them if they don't have a license, raise their petrol prices and take a cut of every journey they are paid for..... Sound like anywhere else we know???

  • Comment number 35.

    It is not impossible to retail in india for Uk companies, we have successfully launched our PaversEngland brand in India at retail and also built a new factory which supplies footwear to India and the rest of the world.
    I have found the regulations to be difficult but not impossible and the opportunity immense. In three years we have become the number one European brand in India and the best selling brand in Lifestyle department stores proving what is possible for a medium size Uk family business?

    You do need the right Indian partner to get through the minefields of taxation and regulation but it is worth it.

  • Comment number 36.

    23. At 12:42pm on 28 Jul 2010, rbs_temp wrote:

    "Are you going to post this in every blog today?"

    Are you going to reveal how you 'paid off your mortgage' with your RBS shares you bought at 12p?

    Come on...the class is waiting...

  • Comment number 37.

    Speaking as someone who has worked with the Indian film and music industry for 20 years I can say they respect expertise and professionalism. The standard of British film and TV production is much higher than theirs and they are willing to buy those skills. If the government undermines the quality base of our home industry by cutting off the blood supply then not only will there be a lot of future trouble in our own media, it will destroy one of our best hidden exports- the creative and technical arts.

  • Comment number 38.

    Trade with India ? Mumbai is satuarated with British exports,our Business leaders have exported so many British workers jobs to the sub-continent I am surprised we have much left we could sell them . Maybe the workers from call-centres and insurance companies etc, Cameron and Clegg can cut the dole queue at a stroke of a pen with a trade deal such as this.

  • Comment number 39.

    #7 "Money lenders and politicians...sleep well tonight."

    Well first up no one knows the full circumstances yet. Secondly, regardless of this, piling all the blame on those groups is just silly. People still have their own responsibility and that includes not borrowing more than you can afford. And even then, being in debt is hardly an excuse for murdering your wife and kids.

  • Comment number 40.

    32. At 1:26pm on 28 Jul 2010, NorthSeaHalibut wrote:

    "Lunch hour eh? :)"

    Lunch? - I am merely demonstrating my ability to multi-task.

    However the ability to do this does imply that I am in fact 'a lady' (according to scientific research)

  • Comment number 41.

    33. At 1:29pm on 28 Jul 2010, kevinpugh wrote:

    The reason the city doesn't invest in manufacturing is because it can make a lot more money from skimming wealth from your pension, savings and investments.

    Why bother doing real work when you can 'earn' without 'lifting a finger' - right rbs_temp?
    (unless of course it's all fantasy)

  • Comment number 42.

    37. At 1:57pm on 28 Jul 2010, Andy Munro wrote:

    "Speaking as someone who has worked with the Indian film and music industry for 20 years I can say they respect expertise and professionalism. The standard of British film and TV production is much higher than theirs and they are willing to buy those skills. If the government undermines the quality base of our home industry by cutting off the blood supply then not only will there be a lot of future trouble in our own media, it will destroy one of our best hidden exports- the creative and technical arts."

    ...Andy - is this teh sort of thing you're talking about?

    http://www.empireonline.com/news/feed.asp?NID=28465

  • Comment number 43.

    Might have been a good idea, Steffie, if you had all taken two or three British made umbrellas with you and had then given the spares away to your hosts. Do a bit of UK export business promo, you know, while you're out there.

  • Comment number 44.

    I would strongly advise against strong commercial and trade links with India. This isn't based on some Jurassic nationalistic sentiment (my parents are from Kolkata and I still have a lot of fondness for the country) but because I have a very bad feeling that the increased trade links will have a detrimental effect on UK workers in the most economically insecure jobs. If there is an agreement between the UK and Indian government to reduce barriers to foreign investment and tariffs, undoubtedly many UK companies will take the opportunity to jump ship and take advantage of cheap Indian labour, without facing government sanctions.

    And if there is (and there will be) anger in the UK about this, the companies will just shrug shoulders and say they were merely taking advantage of the liberalised trade policies that the Con-Dem government enacted with India. The companies that will do this will inevitably be employing UK workers whose positions are insecure, either because they work in rapidly contracting industries or in industries where the cost of replacing these workers is low. Because of this, these workers (who will tend to be working class and in deprived areas of the UK) could potentially lose their jobs through no fault of their own.

    Another issue which a labour MP has pointed out is the danger of Indian private equity firms buying up UK companies, and then cutting jobs or relocating to India. This happened to some US companies after they forged closer economic links with China. This country has already seen manufacturing jobs lost in Redcar as a result of the mothballing of the Corus plant (Corus being owned by Tata) and no-one wants a repeat of that.

    I hope the government, in their race to adopt economically liberal policies, realise that with more trade comes the risk of job loses in UK industries through another route. The industries which may supply other UK companies could find orders drying up as the companies will prefer cheaper Indian imports, and these exporting industries, as a result of a deterioration of their position, may also have to cut jobs.

    Osbourne and co seem to want to encourage Indian companies and investors to make investment in the UK. This may sound good, but the danger is that, after these Indian companies set up in the UK, they may want to hire Indian workers and subsequently will take advantage of Internal Company Transfers, to get Indian workers from their branches in India to come to the UK to work on short contracts on lower wages. This will result in fewer UK jobs being created as a result of investment.

    Yes, I realise that free trade theorists will say that the potential job losses in some industries are inevitable, and that they are simply the victims of global competition, and that the losses are more than offset by the jobs that can be created as a result of increased trade and commercial links with India. However, I fear that this policy will tend to favour expanding industries (that may hire higher skilled workers in areas of the UK with more investment, like the south) and lead to job and economic losses in more contracting industries (like those in the North, which has already suffered disproportionately due to globalisation)

    From India's side as well, there is potential that UK companies that set up business there may take advantage of the often employment regulations with regard to working conditions and hours. There is a chance that these companies, without being kept in check by strong unions like they are in the UK, will exploit workers and will lay off staff without due compensation, because they know there is no union to protect the workers' interests. This will lead to resentment among the working classes of India at being for a ride by foreign companies.

    Another issue is that, as Stephanie has said, this is purely business. But by signing nuclear deals and selling fighter jets to India displays an amoral approach to foreign relations that I find disconcerting. India (and Pakistan) haven't signed the Nuclear Non Proliferation treaty, and although supplying India with assistance in nuclear power development is allowed legally, it again displays double standards from the UK who are seen to be so hawkish with respect to Iran's and North Korea's nuclear development projects. Of course, it is inevitable that, during commercial and trade deals, issues such as human rights, economic development, poverty and nuclear policy is brushed under the carpet, but it's a shame this government hasn't even tried to push India (and Pakistan) in the right direction in terms of nuclear disarmament and in speeding up a peaceful, equitable solution to Kashmir. Cameron I fear has indulged in bit of vulgar economism, which doesn't do us in the UK any favours.

    Of course, I hope that the deal ends up creating jobs and increasing economic security in both countries, and that increasing prosperity in India may make the conditions more suitable to serious peace talks with Pakistan. However, I fear that the deal will suit business interests and the middle classes in both countries, while leading to an erosion in the economic positions of the working classes in both. I hope I'm wrong though.

  • Comment number 45.

    re #24
    Not really the sort of understanding you want to have when selling to, and buying from, another country.

  • Comment number 46.

    39. At 2:06pm on 28 Jul 2010, jmb19045 wrote:

    "Secondly, regardless of this, piling all the blame on those groups is just silly. People still have their own responsibility and that includes not borrowing more than you can afford."

    Does it? - so why all those adverts about 'consolidating your debts'? why all the leaflets dropped through my door offering 'loans' without being clear on the costs of it? What about the hiding of true interest rates and of course our all time favourite - SMALL PRINT.
    If lenders are all honest citizens trying to make an honest living - why the underhand tactics and efforts at deceit?

    "Well first up no one knows the full circumstances yet."

    Well that didn't stop you presuming this was a case of borrowing what you cannot afford - what about being forced to borrow because you have no other choice?
    Don't you know how loan sharks stay in business? If people only borrowed through desire then there wouldn't be a loan shark in business!

    I agree all deaths are regrettable - but you seem quick to attack the symptom and not seek out the underlying cause.

  • Comment number 47.

    Another point, I don't think we should abandon our economic ties with Europe. Cameron, possibly due to his euro-phobic tendencies, seems to think that our main economic ties should be with emerging economies like India and China. However, given the wage differential that exists between the countries, job loses in the UK are inevitable, and it is the poorest workers in the economically most insecure jobs who will lose out, and these will tend to be concentrated in the North, West Midlands and inner London, areas that hasn't seen great investment meaning that these workers who lose their jobs will struggle to find employment. I remember the ridiculous remarks from some right wingers after the Corus Steelworks was mothballed, saying that those who have been made redundant should simply retrain and find new work. What they fail to realise is that a man in his 50s who has worked in steel manufacturing all his life will struggle to retrain and find employment in a completely different industry, and the fact that he is unable to do so doesn't mean he is lazy or that he is a benefit scrounger. This sort of mass job loss leads to severe economic difficulty in the poorest parts of the UK, and will happen with increasing frequency if we develop free trade agreements with India that go too far.
    With Europe, the wage differentials are less pronounced, and given the uniform trade regulations that exist, we may be able to protect ourselves from job loses. Moreover, it is easier for some UK workers to get employment in another EU country, if they see their job outsourced to another country. This is much easier geographically than asking a UK worker to move to India.

  • Comment number 48.

    Mr. Osborne realizes that too much was relied on in financial services...who would have guessed.
    Vodafone will go to court in India to fight the tax assessment. The Indian courts just resolved the 1984 Bhopol case of Union Carbide, so the bill will not be due for sometime and the chances of winning in an Indian court are very slim.
    India sees itself in competition with China and if they continue to follow that lead they will be developing an internal economy as that is where most of China's recent growth as been.
    Because of what the US and UK bankers did to the world economy it is unlikely that many will see either as deserving of economic opportunities in their countries. Mr. Osborne does have a rather strange group of companions but the government has yet to understand that niether they nor financial services are held in high regard. I guess the taxpayers of Britian should be pleased that the bailout will provide for investments in other countries when loans are difficult to obtain in Britian.

  • Comment number 49.

    Another reason that the City does not get involved with manufacturing is that it requires more business skills and acumen and longer/long term investment periods and bankers would much rather do a quick and easier deal and achieve quick turn around on loans and investments and have something to sell in terms of a valuable 'inert asset' like real estate.

    An attitude that may to some extent be understandable from a banker's perspective ... but it has destroyed/is destoying what is left of our real productive UK economy ... i.e. the bit that really matters most.

    Bankers are, in my experience also a bit wary more than they are frightened of industrialists and engineers ... because engineers, scientists etc ... are generally their 'intellectual superiors' (... that should stoke it up a bit).

    You don't need to explain e.g. the PV of £1 computations to e.g. an industrial chemist ... most if not all of them can do a bankers' maths in their head.

  • Comment number 50.

    We should be opening our doors even more not closing them.
    It's all very well saying that British people should fill the jobs but British people are lazy and spoilt and don't want the jobs.
    As for students, well students from outside the EU pay almost three times the amount for going to university here and on top of that they have to have a certain bank balance....so why cut off that cash cow? It just doesn't make any sense.
    I am British but I have lived and worked all over the world and especially in the USA.....as an immigrant abroad I know how hard it is...we have to work a lot harder than the people of that country and we don't have a lot of choices when it comes to doing the kind of work that others turn their noses up at....also we can't go on welfare and swan around because it isn't allowed.
    Get real Britain and don't shoot yourself in the foot!

  • Comment number 51.

    I can imagine it now...

    JULY 2020

    MRS SINGH: Hello is that my telephone/insurance/bank?* Delete where applicable.
    JOHN SMITH: Yes madam, how are you today?
    MRS SINGH: Pardon, can you repeat that?
    JOHN SMITH: Yes madam, how are you today?
    MRS SINGH: Sorry, can you repeat that?
    JOHN SMITH: Certainly madam, how are you today?
    MRS SINGH: Sorry I can't understand you..... (Puts down phone)
    MRS SINGH TO HUSBAND: One of those bl**dy UK call centres again!!

  • Comment number 52.

    Another thing that I note is there is a lot of bemoaning of the fact that there is significant red tape for business to wade through and barriers to foreign investment in India, even from economically progressive papers like the Guardian. We shouldn't forget that the UK employed significant protectionist measures during the period of rapid industrialisation, as did the USA following the economic plans of Alexander Hamilton. So we shouldn't begrudge developing countries looking to protect their interests. I know free trade theorists claim that protectionism will make everyone less well off, but a bit of protectionism is not surprising.

    Moreover, I don't think that the UK government should look to appear too partisan when forging trade links with India. Issues such as Kashmir, the Maoist insurgency are not resolved, and Cameron's "kick and run diplomacy" (term created by the Guardian) may appear to Pakistan that the UK is taking sides. I've followed the Kashmir conflict, and no side is faultless nor is any side completely blemish free when it comes to human rights violations. So, the UK government should show that is realises that this issue is not black and white, and I think should only look to forge extremely strong relations with both India and Pakistan once Kashmir is solved peacefully, and once both countries sign the NNP deal and begin disarming their nuclear arsenal.

  • Comment number 53.

    Instead of trying to do this "special relationship" hogwash in India he ought to be looking toward the real problem in the UK.

    Reduce the cost and complexity of business here and watch the economy take off.

    While employing someone here for instance is such a legal minefield it is no wonder that "contracting out" that complexity will make sense, often to overseas workforces less encumbered with lawyers and do-gooders sitting on their shoulders.

    While you are at it put everybody "on benefits" on a minimal wage and let them sort out their own living costs (no resource sapping "agencies" to slow us all down.) . That would also reduce the cost of business.

    The less it costs here the greater the chance the Indians (and everyone else.) will buy it from here.

  • Comment number 54.

    Its no surprise that the projected big players in the world are among the most populous nations with large landmass - China, India, US, Indonesia, Brazil are the top five most populous nations, Nigeria at 8, Russia is at 9. These places also have a lot of natural resources due to their land area.

    Learning to cooperate properly as a much bigger entity - such as the EU - is the only way that we will continue to be a major player. Otherwise the world will just ignore us, the way that India is probably ignoring us at the moment.

    However many HYS readers appear to be living too much in the past for such forward thinking.

  • Comment number 55.

    “A unique £30m knowledge transfer package between UK-based Sheffield Forgemasters and India’s largest power equipment maker, Bharat Heavy Electricals Limited (BHEL), has been agreed in a landmark deal.”

    Link : http://www.sheffieldforgemasters.com/news/2010/06/sheffield-forgemasters-exchange-landmark-deal-with-indian-engineering-giant1

    Maybe the Condems should have taken more business members like this with them on their ‘begging bowl’ trip instead of all those financial parasites, - and when they get back, they explain why they didn’t see the value of making a small LOAN to this company who have the potential of employing many thousands of those British public sector workers there are just about to make redundant

  • Comment number 56.

    In 2003 National Grid Transco employed guys from India to take over our IT department where I worked. In 2004 I was made redundant (after 29 years service) as where many others. Earlier this year my wife's job was transferred to India by the same company and now she is redundant, David Cameron might be all smiles in india but he and his cabinet AND Labour's former cabinet ignore the plight of the UK's workers again and again.

  • Comment number 57.

    Hopefully, the UKGov delegation will be demonstrating to the INDGov representatives the high quality of goods the the UK produces, for examples:

    1. The jet the flew to India on, made in...erm, oooh, ummm...
    2. The cars that drove them to the UK airport...ah. hmmm.
    3. The mobile....phones....used...by..... [clears throat]
    4. ????

    Ok, bad examples. However, behind closed doors the UKGov delegation will be pushing:

    1. Oxbridge education.
    2. Saville Row suits.
    3. Massive outsourcing deals from UK to India.
    4. Smoke & Mirror Services (Financial Services to you and I).
    5. Continued blind-eye to Intra-company transfers (ICT's).

    That's a HELL of a long way to go for a decent ruby...

  • Comment number 58.

    People who talk about returning to the glory days when UK was the "workshop of the world", miss out on few important bits. Unlike then when steam engine, with immense amount of coal, helped Britain take giant leaps when other countries were still mired in age old technologies. It's much more competitive now and Britain cannot provide economies of scale which are the hallmark of the likes of China and India. It's not always about quality but quantity as well. China produced more than 8 million cars last year as compared to less than 2 million in the UK. Surely the standard of cars produced in China is much lower but with such high volumes China can easily buy quality. Recent example being when Geely bought Volvo (including its R&D and high-quality safety technology). Lenovo, a Chinese computer giant, bought the PC segment of the IBM a few years back. India, thanks to its economies of scale, works similar to China. Tata has bought into the likes of Jaguar. Is any British brand, apart from the financial sector ones, is big enough to create global brands with economies of scale that can match China's or India's? I think not. The UK with such a strong currency can only produce high-end products, which has fewer buyers in the world. If Britain wants to make its economy more diverse by enlarging the industrial sector, then it should learn to forgo the current standard of living and learn to live more within its means. Remember China's saving rate is 40% but Britain's I think is negative.

  • Comment number 59.

    #49. At 2:41pm on 28 Jul 2010, nautonier wrote:

    "Bankers are, in my experience also a bit wary more than they are frightened of industrialists and engineers ... because engineers, scientists etc ... are generally their 'intellectual superiors' (... that should stoke it up a bit)."

    There are 10 types of people in this world, those who understand binary and those who don't.

  • Comment number 60.

    Is it a coincidence that a few days ago the BBC was mentioning the drastic need for IT security specialists, and Dave is off to India? The best thing they could do for this country is scrap the Education system and start again - has anyone looked at some of the recent Science GCSE papers? It's the Green party leaflets recycled into a touchy feely 'science taster' - 2 parts to a Chemistry question in 2009 - after giving figures on recycling of Iron, meaning less landfill, less energy and less CO2 used, pupils are asked 'Give 2 reasons why it is a good idea to recycle Iron' - and 'Suggest how the local council can increase the percentage of used steel cans recycled' - can't decide if this is the Sanitary Operatives paper misfiled or maybe Dave despairs of ever changing the Education system and is off to India because we need more Indian Graduates to fill our Uni Science courses.

  • Comment number 61.

    It's all very well saying that British people should fill the jobs but British people are lazy and spoilt and don't want the jobs.
    ==========================================================================

    I'm sorry but this is a gross oversimplification. Yes, some people in the UK may be a bit work shy and prefer idleness, but this is true in all countries. When I lived in Kolkata there were people like that, who also took the opportunity to strike rather frequently even though the strikes were not always because of worker exploitation by employers (although of course many times it was). So there are lazy people in all countries, and the UK doesn't have a monopoly on work shy people.

    The problem is that there are many people who have suffered from the de-industrialisation of the country. This has especially affected those in the North, after the closing down of many heavy industries. Moreover, after Thatcher's free market fundamentalist policies in the 80s, where many state owned enterprises were privatised, several of these industries were either closed down or sold off to foreign companies, who either shut down unprofitable plants or relocated to countries with cheaper labour. Now, many of these workers, who are highly skilled in certain industries (like steel manufacturing), will inevitably struggle to find work, because having worked almost all their life in a certain industry, retraining for an office job is extremely difficult for many of them. So it's not that these workers are "lazy" or "benefit scroungers", it's just that the extreme change in the composition of the UK economy, accelerated by free trade and globalisation, has eroded their positions and made it difficult for these workers to find new jobs that suit their skills set. It is grossly unfair to blame them, as the Daily Mail and the Tories do.
    But I also don't think immigrants should be blamed for "stealing" British jobs. Immigrants are just trying to do the best they can, and they shouldn't be vilified for trying to improve their conditions. When that happens it smells a bit of xenophobia, and unfortunately clouds the whole issue.

  • Comment number 62.

    51. At 2:48pm on 28 Jul 2010, mark_123 wrote:

    I can imagine it now...

    JULY 2020

    MRS SINGH: Hello is that my telephone/insurance/bank?* Delete where applicable.
    JOHN SMITH: Yes madam, how are you today?
    MRS SINGH: Pardon, can you repeat that?
    JOHN SMITH: Yes madam, how are you today?
    MRS SINGH: Sorry, can you repeat that?
    JOHN SMITH: Certainly madam, how are you today?
    MRS SINGH: Sorry I can't understand you..... (Puts down phone)
    MRS SINGH TO HUSBAND: One of those bl**dy UK call centres again!!
    ========================================================================

    If the UK implements an outsourcing tax, the problems of call centre jobs being outsourced could be at least partially reduced. Free Market theologists may cry blasphemy that we are interfering with the market, but in actual fact we are merely altering incentives in the market, namely giving companies incentives to keep call centre jobs in the UK. And some may say this is unfair to India and will increase unemployment, but in reality there has been a trend where many recent graduates are no longer joining call centres but joining other industries where long term prospects are better for them. Moreover, I don't think call centre workers in India particularly enjoy the monotonous work or the abuse they face from irate enquirers who can't understand their accents.

  • Comment number 63.

    As a result of buying Tetley, Corus, Jaguar Land Rover and the rest, Tata is now the single largest manufacturer in the UK.

    Yes Stephanie we know. No need to rub it in. We're all perfectly aware that the City thinks that India's negative attitude to foreign takeovers is an advantage because once its sold off all our manufacturing companies to India and elsewhere then it needn't worry about investing in manufacturing stuff and can spend it's time gambling.

    Where are the barricades?

  • Comment number 64.

    The UK does have something India wants; a British passport. Still doing a roaring trade in those! Oh and lets not forget those jobs that used to be done in the UK, plenty of those being traded to India, with little in return.

  • Comment number 65.

    David Westwell, that is what happens when governments embrace free market fundamentalist policies. However, I don't think it's fair to blame India for the loss of jobs, because foreign companies from all countries have, once taking over a domestic company, been prone to outsource jobs to their native country. It isn't a phenomenon that is unique with Indian companies.
    Of course it is sad that you and your wife have lost their jobs, but the situation is even worse for the working class men and women in manufacturing jobs in the North East, who are in even more economically insecure positions and because of their specialised training in their industry, finding work is even harder for them, compared to individuals in the IT services.

    On NDTV (Indian news channel) just now, Cameron was waxing lyrical about the low corporation tax rates in the UK. He is clearly unaware that this reduction in tax rates, which it may encourage foreign companies to set up and create jobs here, will lead to a race to the bottom, as the government's revenues will decrease, and the government will be less able to provide the social security nets and welfare provisions to those workers who have had their jobs outsourced (which is inevitable). Call me Dave is leading this country in a VERY dangerous direction, and if he's not careful, there will be significant resentment about this new "special relationship" with India, which the UK workers will feel is only resulting in job loses.

    An even more dangerous by-product of this resentment could be the re-emergence of far right wing extremist parties like the BNP, who will use the resentment as an opportunity to blame British Asians for the economic uncertainty faced by the working class in this country, because they will claim that the jobs are going to a country/region from where a lot of immigrants to the UK are originally from, so it's doubly unfair for UK workers. If Cameron isn't careful, his free market utopian policies could lead to severe economic and social problems for all communities in the UK.

  • Comment number 66.

    I think the UK has to invest in more R&D and start to value its engineers and scientists more. Only then it can rise again as we see that banking/finanicial sectors are fine for short term boom but not for long term sustainable growth. India has a huge population of engineers and that is what is moving it fwd. Even though they are paid less in India but if living costs are taken into account they earn more than what the UK ones earn.... to be called an engineer in India one must atleast have a BEng... and in the UK everyone one who can fix something is an engineer. UK has to raise its profile in technology sector else it will continue to decline.

  • Comment number 67.

    As an addendum to the last point, I have heard and read a lot of people (especially in the IT industry) angry and resentful at India for outsourcing jobs. This is a natural reaction, but it can have some really severe consequences on British Asians in this country as well. If someone sees an IT department with a relatively large number of brown skinned people, the idea that some of these are Indian nationals brought over due to Intra-Company Transfers will exist, and the anger will grow, even if majority of the workers in that office are British Asians, born and brought up in this country, so the jobs are being occupied by British workers. But this state of affairs will be exploited by the far right, who will pose the question, "How is it fair that Indian companies are buying up UK Companies, outsourcing jobs, and yet we in this country are also having to compete with British Asians for jobs?" This will strike a chord with many disillusioned workers in this country, and it has the potential to develop into severe inter-community tensions.

    The free market religion needs to be exposed, otherwise good, honest people in this country will be in the middle of a breakdown of society caused by ruthless unfairness of market forces.

  • Comment number 68.

    Having returned from a trip to my mother's native home (Gujarat, India) India needs alot of foreign investment in the form of business and expertise. India has the POTENTIAL to be the world's secound largest economy. It isn't there yet. India's infrastructure is nowhere near world class. Growth is hampered by corruption on many levels and in places, India is a semi-lawless society. Economic development requires a reformation of social morals and attitudes.

    Interestingly, I came across a High School Principle who said that 'Unfortunately, my students dream of coming to England. I want my students to see that India has great potential. I want them to invest in India's future.' Allowing British businesses to invest in India would create much needed jobs for Indians. They wouldn't need to emigrate to England.

  • Comment number 69.

    The UK cannot compete in mass industries but should be clever enough to compete in highly specialised niche ones because if you do then it might avoid getting in the way of China or India. So for exmample Japan's biggest export is to China and Germany still sells things that China or India wants to buy. That apart the others will have to work in public sector jobs or services (like tourism).

  • Comment number 70.

    "Stephanomics: Does the UK need more from India than it's willing to give in return? "

    Yes. It's called "profit".

  • Comment number 71.

    Oh no! - While Dave's out getting a tan in India - poor old Nick Clegg has just been found out!
    Do not mess with Merv, he was educated in Wolverhampton and therefore will not understand your southern subtle hints at 'cover for me Merv' - he says it how it is - whether you like it or not. He disagreed with Brown and he disagrees with the coalition - at least he is the one consistent party in this debacle.
    http://www.guardian.co.uk/business/2010/jul/28/mervyn-king-nick-clegg

    "Liar, liar, pants on fire - gonna tell your mum because you've got a dirty bum!"

  • Comment number 72.

    Is Stephanie in Mumbai then? - WHO IS PAYING FOR THAT?

    You don't need to be that close to the delegation to know what tripe they will be talking. What about the air miles Stephanie? Surely you could have done a video conference?

    I hope you're not out on an 'outsourcing excercise' for the Beeb. Especially for blog moderators!

    55. At 2:57pm on 28 Jul 2010, Sand_Castles wrote:

    "Maybe the Condems should have taken more business members like this with them on their ‘begging bowl’ trip instead of all those financial parasites, - and when they get back, they explain why they didn’t see the value of making a small LOAN to this company who have the potential of employing many thousands of those British public sector workers there are just about to make redundant"

    ....because Government always look after their friends first and their subjects second.
    http://www.bbc.co.uk/news/uk-england-south-yorkshire-10726896

    The actors have changed - but the play remains the same.

    58. At 3:12pm on 28 Jul 2010, Ahmad R Shahid

    Brilliant analysis, however some mug went and told the population of this country that they can "have their cake and eat it" and have supplemented that lie by extending credit so they can 'achieve the dream'.
    Our only 'product differentiation' we can hope for is quality - but with the cuts in education I don't think the quality of our labour or the quality of our innovation will be comparable with other nations who take the education of the next generation a little more seriously - like China

  • Comment number 73.

    maybe Dave despairs of ever changing the Education system and is off to India because we need more Indian Graduates to fill our Uni Science courses.
    ========================================================================

    If Dave, true to his free market principles, is also attempting to persuade Indian graduates to come to the UK to increase the labour market flexibility and to fill certain jobs, then we are going to see an inflow of Indian economic migrants, and many Tory voters, who thought they were voting in a guy tough on immigration, have actually voted in someone who is extremely laissez faire on immigration. However, they may not complain because many Tory voters actually have a problem with Asylum Seekers, even though many are being persecuted in their home countries and deserve protection from developed countries.

    It is the UK workers in insecure economic positions who will suffer from the flooding of the labour market with Indian workers. And when there are inevitable protests, call-me-Dave will quote statistics that asylum seekers and illegal immigrant numbers are down. But these workers don't have a big problem with asylum seekers, because the working class on the whole are tolerant and very sensitive to the problems of the asylum seekers who have had their human rights eroded. Their concerns are with ECONOMIC immigration, and the effect this has on economic security. This Con-Dem government will do nothing to protect these workers, and will against provide the BNP with oxygen to espouse their bigoted propaganda.

  • Comment number 74.

    60. At 3:23pm on 28 Jul 2010, DevilsAdvocate

    What would you prefer the science covered in school - Alchemy?

    Surely the science of the future is going to be how to re-use our natural resources - or do you believe that the finite planet earth will simply provide resources forever? - and if so, please can you explain the steps of logic you used to work that out?

    I would also say that the reason that type of question is included in the curriculum is because of parents failure to teach that to their children (despite most of them being taught that themselves by their own grandparents). Maybe if the parents of today weren't so selfish and determined to use more than their fair share of resources in some excercise in 'mass hubris-tyria' then the educators wouldn't need to take on that job.

    ...now do you think the poor education of today's parents might have something to do with them being 80's children - a time of 'loadsamoney' for the private sector and the state education being shredded by Thatcher?

    ...or would you rather play devils advocate?

  • Comment number 75.

    The snag with relying on such "products" as Intellectual Property is that India ignores UK patents and copyrights and there is nothing UK firms can do, except wring their hands.

  • Comment number 76.

    It's ridiculous to complain about Indian companies investing in (or buying, if you want to me emotive) UK companies in the last few years. The UK (and US) have consistently been the biggest beneficiaries of globalisation, with significant migration to developing countries (managers in Indian outsourcing centres) and the biggest owners of developing economy countries. Not to mention that huge amounts of money and resources that have flown out of India to the UK ever since colonisation.

    Don't believe me? Just look at how many foreign assets are owned by British companies and private equity houses - the only reason Tata made headlines is because it's the first time its happened the other way around. What we really should be asking is where the benefit from all these profits have gone? Has the average person benefitted or just the partners and investors in large PE houses and funds? We've squandered our wealth on the richest, and I can't blame India for wanting to avoid our mistakes.

  • Comment number 77.

    The UK does have something India wants; a British passport. Still doing a roaring trade in those! Oh and lets not forget those jobs that used to be done in the UK, plenty of those being traded to India, with little in return.
    ===========================================================================

    This sort of view is regularly expressed, and if the Con-Dem coalition doesn't deal with it (either by employing some protectionism, trying to create more jobs through the FTF (Future jobs fund), taxing companies that outsource), then there will be a severe backlash against this government, because many people will feel that the immigration policies employed by the government is no different to previous governments, and there is a strong chance of the BNP getting more powerful. I read a lot of comments on newspaper websites and the BBC, and the anti-immigration sentiment is strong. The only way to deal with it is for a left wing Labour government to return to its roots of social liberalism (therefore being sensitive to asylum seekers and those fleeing from persecution), while being economically left wing (employing regulations against ITC, severely reducing economic immigration, devising a "public interest test" to stop UK companies being bought by foreigners) etc. If the Labour party, after electing its leader can do that, it can return in power in no time.

  • Comment number 78.

    62. At 3:42pm on 28 Jul 2010, SlightChange wrote:

    "If the UK implements an outsourcing tax, the problems of call centre jobs being outsourced could be at least partially reduced. Free Market theologists may cry blasphemy that we are interfering with the market, but in actual fact we are merely altering incentives in the market, namely giving companies incentives to keep call centre jobs in the UK. And some may say this is unfair to India and will increase unemployment, but in reality there has been a trend where many recent graduates are no longer joining call centres but joining other industries where long term prospects are better for them. Moreover, I don't think call centre workers in India particularly enjoy the monotonous work or the abuse they face from irate enquirers who can't understand their accents."

    The key difference is that the Indian workforce and people are much easier to exploit. Let's cite some examples.

    Bhopal - You can have an accident, kill and disfigure thousands and never have to pay much in compensation - in the UK there would be more questions raised and a lot more demanded (I think Corby was the steel works here, not properly cleaned up leading to birth defects)

    Unions - As far as I am aware there is very little union activity in India, so much easier to impose pay cuts when your profits diminish (as they tend to do)

    Desperation of the workforce - Again, as I believe there is very little social care in India, if you don't work - you'll die. This is like Christmas for our profit making corporations. Unlike this country where you have all that minimum wage and workers rights stuff getting in the way.

    taxation - I presume little social provision means lower taxes and therefore a much better environment for business.

    Government - Now I'm nut suggesting the Indian Government is corrupt (glass houses, stones etc) - but I believe there is less scrutiny on Government decisions. In this country we're 1 better by having the scrutiny, although in both cases there's very little you can do about it.

    Inflation - Oh a high inflation rate is great for business, especially if you're 'asset heavy' in your business. The current rate (as measured by the Government) is about 10% - and remember Government always underestimate their inflation rate. Their growth rate is supposedly about 8% - so at best they sit on a 2% real inflation rate.

    Most of those benefits outweigh the downsides - transport links, security, language barriers which is why Cameron has taken his 4 horsemen of the Apocalypse to Mumbai.

    However I have faith that the Indians are far too clever for him and are infact using the UK as a 'makeweight' to prompt an improved offer from another interest party.
    Maybe the only thing that will satisfy them is if we give them their gold back - whoops - didn't Gormless sell it all off?

    http://socyberty.com/history/the-stolen-wealth-of-india-during-british-rule/

  • Comment number 79.

    I hate Enoch Powell's politics, but his comment in the infamous rivers of blood speech that, "As I look ahead, I am filled with foreboding. Like the Roman, I seem to see "the River Tiber foaming with much blood"" may come close to being realised, but not for the reasons he envisaged. He believed, wrongly in my opinion, that the immigrant populations (especially the African community) would not integrate into British society and their ways and values were in some way inferior to the indigenous British values. This was clearly bigoted, and he was shown to be completely wrong about it because the Black community has integrated very well into British society.

    However, I envisage violence and significant civil and social unrest breaking out in the future, not because of any white supremacist movement, but because of a loss of jobs, economic security and an erosion in the position of the working class. This isn't the fault of immigrants, who are as much slaves to the market as the working class. But with the far right fanning the flames, someone will be made a scapegoat, and I believe that the British Asian population may face the full force of the discontent. This would be a tragic situation, because the ensuing tensions won't be the fault of either the working class or British Asians, but the fault of the free market solutions enacted by this neoliberal coalition government.

  • Comment number 80.

    We should not listen to people who say we need skilled people from abroad instead we should train/retrain those here as it is much more beneficial in the long term. But individual companies cant afford to do this, the cost must be born centrally
    As for wages engineers and IT workers could afford to live on more competitive wages if the excessive wages paid in financial sector didnt mean everything in this country (particularly houses) was so expensive!

  • Comment number 81.

    We've squandered our wealth on the richest
    ============================================================

    I agree entirely with this sentiment, and personally the abolishment of these private equity houses and hedge funds would lead to much greater economic stability. Unfortunately, that won't happen, and in a free market system, there will be capital flows to wherever the highest profit can be accrued, and there exists a "virtual senate" of hedge funds, investors, private equity firms, currency speculators who may severely damage a country if they employ economically left wing policies like regulation. Any country that adopts left wing economic policy will see capital flight, as seen in Venezuela after the election of Chavez.

    In capitalism, the profit motive rules supreme, and companies will outsource and take on foreign workers if it helps their profits. They will relocate their businesses to countries with low labour costs. companies can be taken over by larger firms, a move facilitated by hedge funds who earn a profit from such takeovers, and this inevitably results in job losses. The problem is capitalism, and unfortunately, many people do not criticise the system of capitalism, and instead may blame Indian workers in call centres for stealing UK jobs, or Indian companies for outsourcing operations to India.

    The above sentiments are completely understandable, but it is not the fault of the workers in call centres that they have the jobs that were originally done by UK workers. The problem is the free market system, which inevitably fits labour against capital, and even worse, can lead to workers in different countries or of different ethnicity blaming each other for their job losses. This is exactly with the capital owners want, because by having the workers fight amongst themselves, few questions are asked when the capital owners make huge profits that contribute to gross inequality.

    The only solution is for all countries to hopefully move towards a DEMOCRATIC socialist system of economics and social organisation. Then, we will have economic and political cooperation to improve the lot of ordinary people all over the world, rather than just the private equity firm owners. We will no longer be slaves to the whims of capital, and no longer felt obliged to devise fiscal policy to appease the bond markets. Governments can work with each other to devise fair trade that leads to benefits for all, not just the few.

  • Comment number 82.

    Someone made the comment that if UK businesses invest in India, jobs will be created and therefore there will be less immigration from India to the UK. This may be true, but it's not a long term solution. Eventually, these businesses may find that wage rates will rise in India as more workers will want greater economic security. Then these companies will leave India and move on to another emerging economy will lower wage rates.

    The major reason for a lot of the immigration from South Asia is jobs, economic security and quality of life. There is severe poverty in South Asia, in all the countries (India, Pakistan, Bangladesh, Sri Lanka etc) The economy may be growing, but a lot of the higher paid jobs are going to the middle classes in the big cities like Bangalore and Mumbai. Those in rural areas and other smaller cities are struggling to find jobs due to inadequate investment. Moreover, there are many areas of India with poor health facilities, poor sanitation, insufficient educational opportunities all of which leads to a poor quality of life for many Indians, even those who may have a job. Moreover, the economic deprivation leads to communal violence, and many cities are, like someone said, semi lawless.

    To stop immigration completely, we need greater economic equality across countries. And to do this, we need to replace capitalism. It was capitalism that in fact contributed to such disparities in living standards between countries and continents. The period of colonisation and imperialism, as the economist John Hobson said, was the result of capitalist countries needed markets to fulfil demand for their products. Seeing as imperialism has played a fairly large part in the economic deprivation of a large percentage of the population the LEDCs, it is clear that capitalism isn't going to solve the problem.

    Only with socialism is there a chance for equality, not just within countries but between countries. Once socialist policies have elevated the common man to at least a reasonable standard of living, with free access to basic amenities like food, water, gas, electricity and basic services like free education, healthcare as well as a secure job, then you will see the incentive to migrate to a country with higher living standards will disappear. Immigration will drop significantly, and no more will any working man have to worry about economic insecurity.

  • Comment number 83.

    #66. addh wrote:

    I think the UK has to invest in more R&D and start to value its engineers and scientists more.

    It will never happen.

    UK has to raise its profile in technology sector else it will continue to decline.

    OK... we'll continue to decline then because the people that hold the purse strings simply aren't interested. You have to understand that until we have a Govt that actually has an industial policy and is prepared to take on the City to make that policy happen then we will simply continue to go backwards.



  • Comment number 84.

    I still believe that, contrary to popular wisdom, I think the UK should look to develop stronger ties with the EU. I know the EU is economically sluggish at the moment, but if we develop both economic and political ties with the EU, we could have a free trade area which is much more likely to benefit the insecure UK worker than if we develop closer economic ties with India. India, with its different state governments, has different legislation and different enforcement of such legislation. For example, some states have strong union protection for workers, others have none. Some states regulate business relatively strongly, others have no legislation. Therefore, if the UK government, wanting to protect UK workers, attempted to come to an agreement with the Indian federal government to prevent Indian companies from outsourcing jobs without paying compensation or giving significant prior notice, it is unlikely that Indian companies will abide by these legislation. Moreover, as I have said before, wage differentials, differences in union representations in both countries (the UK has much stronger unions to protect workers), and differences in the degree of regulation and bureaucracy will result in a really fractured and complicated trade relationship. Moreover, there is much greater chance of UK workers losing their jobs, and Indian working classes being exploited.

    On the other hand, if we forged greater relationships with the EU, I really believe workers in this country can be better protected. EU legislation acts across all countries in the EU, so if the EU enacts legislation to prevent outsourcing or hostile foreign takeovers, then all countries have to abide by that, and it is much easier to monitor breaches due to the governing system of the EU. Moreover, with lower wage differentials, and the fact that the EU is much more likely to enact punishment to companies who don't abide by the rules (regulations in India a lot of the time aren't enacted), the protection of the most economically insecure is more likely.

  • Comment number 85.

    SlightChange - You want too much change !

  • Comment number 86.


    "She said She would be my Friend,
    my Friend,
    but She took every Penny I had."

    (With apologies to Mungo Jerry.)

    "Special Relationship", "my Best Friend " et al. How about Britain just getting off her knees and behaving like a Proud Nation State for once.
    Trading pragmatically ,ruthlessly and without all the sentimental slobber our Politicians subject us to as they enrich themselves. No ones fooled by any of it you know.
    A great trading Nation does not have "best friends."
    Look to Switzerland to see how its done. No one claims to be Switzerlands Best Friend.

  • Comment number 87.

    Indian companies are now the second largest foreign employers in the UK after the Americans. Tata alone employs around 150,000 workers in the UK.
    As an Indian who lives in the UK I think that there are many historical, educational and technical links between the two countries. The UK has been slow to exploit that. Late is better than never though. There is a lot to be gained mutually.
    The English language was Britain's greatest ever export to India but do not forget "CRICKET". We have a game to play and business to do - Let's get on.

  • Comment number 88.

    I think after Call-Me-Dave's comments this evening his motive in India is to start a war between India and Pakistan. Real smart move winding up a nuclear state with a somewhat volatile record that has a large immigrant population within our own borders. Well played Dave, these aren't the playing fields of Eton you know.

    Suppose that'll slow down the competition while they're busy nuking each other. Maybe Dave could throw a spear at China while he's there, its only just across the Himalayas, and get them involved in the fisticuffs as well.

  • Comment number 89.

    It would be good to consider that the number of people living in poverty in India exceeds more that 400 million. The government of India has some responsbilities to create training and job opportunities for these citizens. The fostering of the global economy by banking and big business has provided opportunities in other nations while leaving home poor still poor. Nations must develop internal economies that are sustainable and stop listening to fast-money investors and bankers who only care about short-term profits and care little about the effects of such policies. The governments are influenced by wealth mongers and everyone else has to fend for themselves. Irrresponsible governmental policies shored up with stupid justifications have placed everyone in this current situation and they desire to follow the advice of the bankers who got them into the situation as a way out. Cheap grain from Egypt undermined the Roman economy and played a part in the downfall. Roman was out-sourcing many of the trades and products. These processes are not new, they have repeated many times and the earth is littered with fallen civilizations....India has had their share too.

  • Comment number 90.

    The current economic policies follow mainstream economic ideas. I disagree profoundly with those ideas as mainstream economics is based, in part, on ideas, theories etc. that are demonstrably incorrect. Basing economic decisions on incorrect theories seems to me to be dumb in the extreme.

    However, we do need our economy to expand and create as much high value employment as possible and all the support jobs that will then flow. After all, its not going to happen from internal demand growth. It does need to come from somewhere. So we need the ConDems to go to India and bang the British drum.

    However, for as long as I can remember, the UK has had a trade deficit. So for the last 40 – 50 years we would have benefited from efforts like this. All political parties stand accused of not really doing enough that is EFFECTIVE around the world. Yes, there have been successes in the past; but it has always seemed remarkably difficult for the UK to drum up trade.

    So, we should be watching and recording what happens. How many new exports are actually produced from this effort? We'll see.

    Just a thought, but why not send every man-jack and woman-jill of the government away to drum up trade for say the next 5 years or so; they could leave us alone to continue as we now are, we could maintain employment. To some this would be a disaster, to others, like me, we would have exported, well what, I cannot be too disparaging, but we would have exported something that we can well do without.

  • Comment number 91.

    82. At 6:09pm on 28 Jul 2010, SlightChange

    I agree with you regarding closer ties with Europe but totally disagree that socialism will resolve the problem albeit if human nature was not as it is, your proposals might work but we do not live in an ideal world.

    The key point is that we live in a world of finite resources with a finite energy source until nuclear fusion gets off the ground. The beneficial value of global free trade is derived theoretically from the idea that overtime as a result of the learning curve, comparative advantage and increased specialisation individual economies would develop around their unique areas of added value perhaps Germany machine tools & software, the Uk Insurance and pharmaceuticals thus the things that we do better than others we export and the things others do better than us we import Over a business cycle our exports should balance our imports. The emergence of multinational companies, WTO, cheap bulk transport and multi national logistic management systems has meant that the theory no longer holds true Those countries that have been the strongest advocates of free trade in practice rather than rhetoric have seen increasingly jobs exported to the those countries with the lowest pay rates. Production can be switched quite easily from one country to another as most recently exampled by Tata but they are no worse than any other company. This process would be ok and a self correcting mechanism should operate and over time ( perhaps hundreds years) pay rates should equalise across the globe. Unfortunately this can not and will not happen, overtime what will happen is that standarads of living will be equalised but in a downwards direction as globally we have an inexhaustable supply of unskilled labour.
    However, within the EU we are self sufficient in almost all goods & services if we have reached peak oil I'd suggest that we in Europe should look to make ourselves as self sufficient in resources as far as possible this could include perhaps inviting Russia to join the EU We should then follow a strategy of ensuring that we are able to feed ourselves, produce sufficient energy via our natural resources coal wind wave gas and ensure we are not dependent on any one else for technology.We like the Us have sufficient human capital and capacity to produce all the doctors surgeons and engineers that we need.We need to introduce Europeanwide high import tariffs on all countries where we do not have a equitable balance of trade.
    I would be first to agree that this country has benefited enormously particularly from the Indians that came here after being expelled from East Africa but I have to say that if DC does a deal to enable more Indians through the back door to displace UK IT and systems people as is currently happening in companies like BT then he will do great damage to the UK economy longer term.The problem is that the Multinationals now have the whip hand over national governments therefore I do not expect anything to be done.

  • Comment number 92.

    #84. At 6:45pm on 28 Jul 2010, SlightChange

    Yes, in some ways I agree that closer ties with the EU could well be beneficial. But on what terms should we get closer?

    The EU is now large enough that it has a very wide range of cultures and each culture has its own range of political thought. Some views and mores of one country are a complete anathema in other countries. The population of most countries are indigenous to the area in which they live. Selling the idea of change for the sake of a higher ideal to many in that situation will be virtually impossible. With no obvious single threat against which to foment anger, I would suggest it is actually impossible.

    The EU is being led by many who actually do want closer ties and would jump at the chance of political union. Trouble is that I believe this would provoke a reaction that would blow the EU apart. The leaders have yet to realise that, for the future, our strength lies in diversity. The EU already has it in spades and it could be exploited to the benefit of all. We should all be developing together by being different, providing the support weaker nations need; the aim should be an agglomeration of states, all different, but working together. A few things may need to be common everywhere, they should be the exception rather than the rule.

    Diversity would provide a greater security to all. If one got into difficulties the others would probably be able to offer assistance. Above all, Europe should look for self-sufficiency in strategic materiel; food, water, energy etc so that life and the populations can live and survive. Which is more important, your life or your iPod?

    Developing external links will help with security by bring greater understanding of all the other countries. So, I am all for trade, yes, but not to the extent that our basic security is compromised.

    So Mr Cameron; close ties, but please, not too close.

  • Comment number 93.

    Good for Stephanie for making the trip. No better way to understand a nation than to be there. I like to identify the countries by smell. In Asia and South Asia the food stalls and open air eating establishments make every street a flavor. To the unfamilar this can be discomforting. Also, discussions with local citizens give one a better idea of the politics and issues than a news service. Hard to hide a European in that part of the world..their senses get overwhelmed and they sweat a lot. Bathe in the Ganges...visit the temples...certainly take in tradtional dance and try not to be overwhelmed by the poverty. Wonderful meals can be bought for very little...spices can be diffcult for the bland English palate. Enjoy the opportunity and if you miss a blog post I will certainly understand and would encourage you spend your time expereincing one of the grestest cultures to ever develop in history.

  • Comment number 94.

    59. At 3:21pm on 28 Jul 2010, NorthSeaHalibut wrote:

    #49. At 2:41pm on 28 Jul 2010, nautonier wrote:

    "Bankers are, in my experience also a bit wary more than they are frightened of industrialists and engineers ... because engineers, scientists etc ... are generally their 'intellectual superiors' (... that should stoke it up a bit)."

    There are 10 types of people in this world, those who understand binary and those who don't.

    ............................

    Thanks you for your comment ... as usual witty and entertaining but of zero economic benefit to anyone in the UK.

  • Comment number 95.

    Immigation should be based on reciprocity ... when I see a couple of million British people emigrating to India to find work ... then I'll believe that Indian immigration to the UK is a good thing.

    How many 'Brits' do you see working in Indian restaurants in the UK... 0.000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 and 00000000000000000000000000000000000000000000000000000000000000000000000000000

  • Comment number 96.

    59. At 3:21pm on 28 Jul 2010, NorthSeaHalibut wrote:
    #49. At 2:41pm on 28 Jul 2010, nautonier wrote:

    "Bankers are, in my experience also a bit wary more than they are frightened of industrialists and engineers ... because engineers, scientists etc ... are generally their 'intellectual superiors' (... that should stoke it up a bit)."

    There are 10 types of people in this world, those who understand binary and those who don't.
    -----------------------------------------------------------------------
    As I have only two brain cells (and don't understand business), I think you may have diagnosed a problem that I have suffered from since childhood ...

    Whoopeeeeeeee!

  • Comment number 97.

    People should be allowed to live and work in any country they like.

    The problem is not that too many people are moving to Britain, the problem is that there is such a disparity between the wealth and therefore living standards between one nation and another that people are prepared to risk everything to move to another country.

    The only migrants should be moving for cultural reasons, not economic.

    Until we create a more equal World then we will have this problem of unwanted economic migration. Free market capitalism will not solve this.

  • Comment number 98.

    88. At 8:13pm on 28 Jul 2010, NorthSeaHalibut wrote:
    I think after Call-Me-Dave's comments this evening his motive in India is to start a war between India and Pakistan. Real smart move winding up a nuclear state with a somewhat volatile record that has a large immigrant population within our own borders. Well played Dave, these aren't the playing fields of Eton you know.

    Suppose that'll slow down the competition while they're busy nuking each other. Maybe Dave could throw a spear at China while he's there, its only just across the Himalayas, and get them involved in the fisticuffs as well.
    -----------------------------------------------------------------------
    I posted too soon about the quieter life we were leading under The Coalition compared to the previous Government.

    Oh dear! Time for more sackcloth and ashes.

    Memo to self: Hey! Be more careful out there tomorrow.

  • Comment number 99.

    Well, look.

    I don't believe in nationalism, and whenever I see or hear about poverty in places like India I really wish something could be done about it.

    Wherever I go in the world where there is so-called corruption (bad incentive structures and mismanagement), I see poor management that results in bad incentives (corruption).

    Where I live, the Czech Republic, people STILL look up to the ideal of "Great Britain". Even here, not geographically far but culturally distant, people see the demise of UK manufacturing as a great tragedy. The local mafia hold collections of Jaguar E-Types and Aston Martins, and have their pretensions to British aristocracy just as Adolf Hitler did.

    If the UK wants to export, it should export it's process management know-how, and it should rise to the challenge of building a manufacturing capacity that wipes the floor with anything the entire population of China could come up with in a century. The UK should do so with pride, confidence and knowledge that it will be a return to better times, and an escape from the malaise of a purposeless and futureless existence on the dole, or in the anals of some corporate backwater....

  • Comment number 100.

    Bob #97:

    You are correct that (unregulated) free market capitalism will not solve the problem...it is the cause of the problem.

 

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