Jack Straw – 2004 Speech on Britain and India

jackstraw

Below is the text of the speech made by Jack Straw, the then Foreign Secretary, on 7th February 2004 in Bangalore, India.

Let me thank Astra Zeneca for their hospitality. This research and development centre is focussed on the needs of the developing world, so it is appropriate that it is the first such centre which Astra Zeneca has opened in an emerging market. Its work on tuberculosis and other infectious diseases is hugely important and welcome: 5 000 people die from tuberculosis every day, almost all of them in the world’s poorest countries. Astra Zeneca is the first major pharmaceutical company to devote an entire research unit in India to a developing-world disease.

Ladies and Gentlemen,

No Briton can come to India and not be conscious of the legacy which centuries of shared history have left in our relationship. As Tony Blair said here in Bangalore in 2002, that history is present every day on the streets of modern India and modern Britain.

But today our relationship is much more about the future than the past. It has never been so good, and it is getting even better.

And the relationship is changing – with business at the forefront of that change.

Increasingly, our business links are a true two-way partnership. Britain has long been one of the biggest investors in India – we are currently the third largest. But over the last five years, India has also become an important investor in Britain – it is now the eighth largest. While Astra Zeneca, whose headquarters are in the UK, was opening this research centre in Bangalore, Dabur, an Indian firm, was investing in a pharmaceutical company in Britain to work on a new cancer drug.

That is a good example of the role played by cutting-edge science in our business relationship today. Britain and India have some of the best scientists and researchers in the world. The UK is a world leader for example in biotechnology, while India is building on traditional strengths in areas such as agricultural science and chemistry and developing new expertise in space sciences and energy technologies. Our governments, in partnership with industry, are working to encourage links between scientists by providing grants, fellowships and scholarships. The newly-launched Dorothy Hodgkin Postgraduate Awards, worth £10 million, will allow top science PhD students from India and a number of other countries to study at leading research institutions in the UK.

The fruits of our closer scientific and research cooperation are tangible. About three quarters of Indian investments in the UK are in the knowledge-based sector. Indian IT, biotech and pharmaceutical companies recognise that the UK offers the best place from which to approach a growing European market, which is why 60% of Indian investment in Europe comes to Britain. That investment has created over 1 100 jobs over the last three years. The UK is now also India’s largest market in Europe for IT services, worth nearly $1 billion a year.

Already more Indian companies are listed on the London stock exchange than on the NASDAQ and the New York stock exchange combined. Our trade in goods is rising by 20% every year; trade in services is probably rising even faster. At least two thirds of all software professionals who come from abroad to work in Britain are from India. 14 000 Indian students come to the UK every year to study – four times as many as only five years ago. I have just come from the new British Library in Bangalore, where I was presenting awards to the latest group of Chevening scholars to complete their studies in the UK.

So our partnership is changing and prospering. The Indian community in Britain is playing a crucial role in that. Many Britons of Indian origin are amongst those forging the hi-tech links which are changing the nature of our business relationship.

People of Indian origin have always prospered in Britain. Today they number well over a million – the largest single ethnic minority in Britain today, and the most prosperous. Their links with traditional sectors are still strong with people of Indian origin running a large proportion of British retail outlets. But today, they are just as likely to make their money in IT or biotechnology or law. I see much of this for myself in my own parliamentary constituency of Blackburn, which boasts many people of Indian origin with strong links to the subcontinent.

Young British entrepreneurs of Indian origin are not just prospering in Britain – they are also prospering in India, and forming a vital bridge between our two countries. Take Karan Bilimoria, UK co-chairman of the Indo-British Partnership for trade and investment. Born in Hyderabad, he created a beer called Cobra which has become a household name in the UK. Now he is bringing it back to India by investing here. Or take the example of the many young British Indians working in the IT sector, who are establishing partnerships with Indian firms to help them develop new software.

Bangalore is playing an important part in our burgeoning business partnership. More than 70 British companies have operations here, including leading firms such as HSBC, Rolls Royce, BAe Systems, Logica CMG and Misys. Their work ranges from software development and electronics to aerospace, engineering or education. Bangalore’s links with Britain are also strong in the other direction, through the investments in the UK of Indian IT firms such as Wipro, Mindtree and Infosys, or through collaboration on cutting-edge biotechnology research.

Many of you will know that one aspect of these links in particular has recently hit the headlines in Britain – the decisions by some British companies to outsource services to India, and especially to this region. Increasingly, our mortgages are processed here, our bank transactions completed, our insurance claims approved, our telephone directory and rail enquiries answered – all here in Bangalore.

That reflects first of all the advantages this region has to offer. The concentration of service companies here is also part of a wider trend, as the Indian economy grows into an ever more important domestic market in its own right which service providers want to get close to.

Quite naturally, attention in Britain has focussed on the potential job losses when companies outsource work to India. The British Government, like any government, takes seriously the impact that such decisions have on local employment conditions. We share the concerns of those immediately affected by them, and we have put in place a comprehensive package of support for those facing redundancy.

But we must be realistic about the scale of this. The British newspapers will lead on the jobs lost when British companies source work abroad; but they are generally silent on the number of jobs created by companies from overseas choosing to invest in the UK. We read about the banks and insurers who are relocating jobs to India; but many people are less aware that in 2002, for example, inward investment in the UK financial services sector alone created 5 000 British jobs.

Inward investment is not coming to Britain by accident, but because we have an open, stable economy and a highly-skilled workforce; and because we are investing for the future in education, skills, infrastructure and innovation. Some call centres are moving abroad; but call centres in the UK are set to grow too. Some are even moving back to the UK. Many US companies source their services in Britain. We already have some 5 500 call centres employing 400 000 people. And of course Britain is part of the world’s largest single market in the shape of the European Union, set to grow on 1 May this year to 450 million people.

Globalisation creates jobs in India; but it creates jobs in Britain too. The overwhelming evidence is that open economies, where business can make its own decisions unhampered by protectionist barriers and bureaucratic over-regulation, prosper more than closed ones.

So we will not practice protectionism at home. If British companies benefit from working with Indian service providers in Bangalore and elsewhere, then Britain as a whole benefits.

And this belief in the virtues of open competition means we will also work to break down barriers and disincentives to trade and investment abroad. I believe for example that Indian companies and Indian consumers will benefit if British firms are allowed greater access to Indian markets in sectors where they are world-beating – such as banking, accounting, legal services and insurance.

It is also important that those foreign companies investing here have the right safeguards for their business. I could hardly visit Astra Zeneca, for example, without emphasising the importance for the global pharmaceutical industry of an efficient and properly-enforced intellectual property rights and patent system, in line with India’s WTO obligations. There is still some work to be done to achieve this; but the benefits it could bring in terms of greater investment in India make it well worthwhile.

I hope also that we can soon see an increase in air services between our two countries by resolving our differences and agreeing new flights in the ongoing negotiations. That is what business and consumers in both countries want.

Increasingly the barriers to mutually-beneficial competition between India and Britain are disappearing. Bureaucratic obstacles to investment in India by British companies continue to shrink. And India’s economic reforms over the last ten years have broken down barriers to trade, investment and competition. Those reforms have already paid off handsomely; and all the forecasts are that the impressive rates of growth of the last years are set to continue. India is already the world’s eleventh largest economy, and the fourth largest in purchasing power parity terms. The highest-performing regions in India are true Asian tigers, with growth rates of 10%. There is a real feel good factor here which is obvious even to visitors like me.

But India’s success is in my view not just down to market reforms: it is also the product of a solid framework of values and institutions. India’s democratic, pluralist society supports a vibrant diversity which helps innovation to prosper. A country with 5 500 daily newspapers and almost 46 000 periodicals is a country where discussion, debate and creativity thrive. It is no accident that India produces the largest number of films in the world. India’s other advantage is an education system which produces more than 3 million graduates every year. They are helping make this country a world-class player in cutting-edge fields such as biotechnology and IT, as this centre demonstrates.

And that economic success is not just making our bilateral business partnership stronger. It is also bringing us closer together in terms of our international interests. Nowhere more, perhaps, than in the importance we both attach to making progress on global free trade – whilst ensuring that we do so in a way which maximises the positive impact it can have on the world’s poorest countries.

The last fifty years have shown how much we all benefit from free trade world-wide. Since the GATT was launched in 1947, with a newly-independent India as a founder member, world trade has increased twenty times. That has helped deliver a six-fold increase in world output.

It is in all our interests to make sure that process continues. The European Commission has estimated that halving trade protection world-wide would boost world income by $400 billion per year, or 1.4% of world GDP.

The critics of globalisation argue, however, that this wealth will simply be amassed by powerful multinational companies and by the world’s richest countries, at the expense of the poorest and most vulnerable.

But in fact breaking down barriers to free trade can help the poorest most of all. Since the end of the Uruguay Round in 1994, developing countries’ trade has grown at twice the rate of other countries’. The evidence is that relative to GDP, the poorest countries would gain most from further liberalisation. Taking again the example of a halving of trade barriers world-wide, the European Commission puts the possible gains to developing countries at $150 billion a year. That is three times what they get in aid, and it would lift 300 million people out of poverty by 2015.

The Doha Round is a development Round – which makes it all the more urgent that we get the negotiations back on track. India’s active engagement is a condition of success – so I strongly welcome the clear statements that Minister Jaitley has made lately reaffirming India’s commitment to the trade Round.

You would not expect Britain and India to have identical interests in the Doha Round. But it is a sign of our growing and changing partnership that we have more in common than many would think. First and foremost, we share a strong interest in seeing the Round reach a liberalising conclusion. We have a common interest in avoiding protectionism, for example over steel tariffs. With our long legal traditions, we both want an effective global dispute settlement arrangement.

I know that agriculture is a frequent bone of contention between Europe and countries such as India. But in fact, we in Britain would like to see more Indian access to the European market for your farm produce. Agricultural subsidies are an example of how protection harms both rich and poor. In the OECD countries they amount to more than the national income of the whole of sub-Saharan Africa. The more we can open developed-world markets to agricultural products, the more we help countries trade themselves out of poverty. And the more choice and savings we offer to consumers in the developed world – because agricultural protection increases the cost of food by an estimated $1 500 per year for a family of four in the EU.

Last June the EU took an important step to reform the Common Agricultural Policy by deciding to cut the link between subsidies and production. Over time, this reform has the potential to change fundamentally the direction of European agriculture – to make it more market-oriented and less trade-distorting. But there is more we can and should do – so re-engaging in the Doha round is vital.

Ladies and Gentlemen,

Britain and India both want the Doha round to bring lasting benefits to the world’s poorest. That is part of our commitment to fighting poverty – a commitment which we have long shared, but which is also changing as our modern partnership evolves.

We share the Millennium development goal of cutting world poverty in half by 2015. Britain’s commitment to India’s poorest regions has never been stronger – we are spending £200 million on development in this year alone in India, more than we spend anywhere else. At the same time, Britain and India are increasingly working together as donors, for example in Africa and through the multilateral development institutions.

I think we have both come to realise through this shared experience that sustainable development is about much more than just raising incomes. If we do not also tackle environmental degradation, conflict, insecurity or disease, we cannot create the conditions where people can build better lives for their families. By promoting our shared values of democracy and the rule of law abroad, we are also promoting the conditions where stability and prosperity can take root. India’s example – of a stable, democratic framework which supports a vibrant and unparalleled diversity of people, languages, religions and opinions – shows that link very clearly.

In the same way, we strive for economic success not just because it creates jobs and improves the living standards of our citizens, but because it also cements their security. It is surely no coincidence that the historic steps forward in India-Pakistan relations in recent weeks come at a time of economic confidence in both countries. After half a century of tensions, both countries have a strong incentive to build a secure, peaceful zone where their citizens can continue to prosper. The rejuvenated prospects for SAARC’s economic cooperation will help reinforce that.

That process will, I hope, show how a virtuous circle of prosperity and security can be built. Greater security encourages business to invest for the long term, and the closer ties of interdependence created by trade and growth reinforce security. We have seen in Europe how former enemies can cooperate to build lasting peace and prosperity. It doesn’t happen overnight, but it is something worth working for.

In today’s interdependent world, the agreement to discuss a resolution of the Kashmir dispute is great news not just for people in the subcontinent, but for people everywhere.

As I see for myself in my constituency, it is certainly great news for all those who have come from that region to make their home in Britain. More widely, we all have an interest in seeing peace and security entrenched, because insecurity and tension, however far away, can affect us all. A peaceful and secure India is good for Britons who want to do business here, or simply to visit as tourists to enjoy the marvels India has to offer.

Ladies and Gentlemen,

I started by saying that our relationship, steeped in shared history, is today prospering and changing. Our business links are strong and growing stronger, and they are at the heart of our deepening partnership.

Britain and India have long shared common values. More and more, we share common interests too, and a common approach – whether on globalisation and free trade, promoting sustainable development, or fighting terrorism and building peace and security. Ours is a modern partnership which is firmly oriented towards the future. Let me thank you all for the role you play in that.