UKIBC Annual Summit: a special relationship?

The UK India Business Council held its annual summit on the 10th of March in Manchester under the banner “UK and India: Building a 21st Century Special Relationship”. 


A filmed opening address from David Cameron set the tone for the day: that the UK needs to take India seriously. But implicit in the day’s theme is also an acknowledgement that the UK hasn’t made the most of its historical business ties. Despite a long relationship between the two countries, today the UK does more bilateral trade with Sweden than with the emerging superpower. 


India plans to maintain a growth rate of around 9% for the next two to three decades, and in this time, the balance of economic power between the two countries will switch. The impetus is now on UK government and business to ensure the opportunity is not missed. In RSG’s recent, ‘Fast Growing Companies’ report, the UK ranked behind the US, other Asian countries and the Middle East as a target region for expanding Indian business. 


The decision to hold the summit in Manchester reflected a focus on the Small and Medium Enterprise (SME) market.  Sessions veered between extolling India’s promise for UK business and sharing advice on how to face the day-to-day challenges of setting up shop or building partnerships on the ground.  


Rahul Datla, Chairman of the Confederation of Indian Industry MSME Council pronounced “last decade was for big business. This is the decade for small business.” The reasons he cited include: more favourable policy and regulation from the Indian government; growth in Indian SMEs as foreign companies develop local supply chains; the return of skilled Indians from Europe and the US; a greater risk appetite amongst Indian entrepreneurs; and the growing respect for IP rights respected. 


Peter Sands, Group Chief Executive at Standard Chartered, shared some predictions from the bank’s recent ‘Super-Cycle Report’ which highlight the sheer scale of the Indian economy. India’s GDP is expected to grow from USD 1.5 trillion this year to 8 trillion in 2030. By contrast the UK’s GDP will grow from 2.5 to 6 trillion. In 2030, it’s expected that there will be 68 cities in India with over 1 million in population – it would challenge most Indophiles to name even a third of those. And, as he pointed out, changes are already being felt here in the UK. Following the recent acquisition of companies like Land Rover, Jaguar and Corus, Tata is now the UK’s largest manufacturer, employing 50,000 workers in the country. 


Perhaps the greatest current opportunity is in the infrastructure space, where the Indian government has announced USD 5 trillion in new investment over the next five years. Private Public Partnerships are now the default option for most airports, ports, highways, power, railway, urban transport and water projects. While India turns out engineering graduates in the hundreds of thousands each year, many will move to other professions and the country is predicted to be severely under-resourced to service these projects. UK construction and engineering firms have an opportunity to fill shortfalls in design, engineering and service management. 


But the picture is not all rosy. Delegates and speakers also commented on some of the challenges of working in India. With a shortage of domestic engineering skills, staff turnover is extremely high and wage inflation can hover around 20% a year. Getting clear tax advice and securing payment, especially from the public sector, can be complicated. 


Surprisingly, most of the speakers put corruption lower down their list of challenges, with a common view that strict ethical guidelines and a “just walk away” approach were enough to keep out of trouble. However, many British lawyers refer to it as “the elephant in the room” and the issue is receiving more domestic Indian attention than ever before.