British companies have been “complacent” about business opportunities in India, put off by excessive bureaucracy, corruption and restrictions on operating in some sectors, U.K. Trade Secretary Stephen Green said.
U.K. businesses are losing ground to global competitors and need to focus on opportunities to sell goods in fast-growing economies such as India, China, Russia and Brazil, Green, the former chairman of HSBC Holdings Plc, said in an interview in Mumbai yesterday. He is on a four-day trip to India and will then travel to China as part of a push by the British government to increase exports.
“Many British businesses would say that they got complacent about India and thought it was all too difficult,” said Green, 62, looking out at the 27-storey apartment built by Mukesh Ambani, India’s richest man and chairman of its biggest company, Reliance Industries Ltd. (RIL) India’s economy is expected to grow at 8.6 percent this financial year. “Time and time I hear people say, yes, now I do need to take this seriously.”
India ranked 134 out of 183 countries in the World Bank’s 2011 Doing Business report, 55 places lower than its Asian rival China because of the regulatory hurdles involved in working in the country. India, the world’s second fastest major growing economy after China, was the 18th largest market for British exports in 2009, according to the latest annual data available, behind Australia and Canada. China was ninth.
Britain needs to address a 27 billion pound export gap with Brazil, Russia, India and China, Peter Mandelson, the former business secretary, said in a speech earlier this month. The U.K. has a $3.2 billion trade deficit with India, Mandelson said.
“It tells you we have a lot of work to do,” Green said of the trade deficit with the so-called BRIC countries. “If there were magic wands to wave, they would have been waved by now. So turning this around is the work of several years, five to 10 years.”
On his visit to India, Green met with Commerce Minister Anand Sharma and Finance Minister Pranab Mukherjee to press for greater economic liberalization. In Mumbai, he had discussions with Governor of the Reserve Bank of India Duvvuri Subbarao and business leaders including Ratan Tata.
Green’s visit to India follows a trip by U.K. Business Secretary Vince Cable in January and a delegation led by Prime Minister David Cameron and Chancellor of the Exchequer George Osborne in July. Britain’s coalition government is trying to increase exports to kick start an economy saddled with debt and facing the deepest spending cuts since World War II.
Green said that Britain and India have a shared history that should benefit U.K. firms although companies and the government have not done enough at expanding relations. India was ruled by Britain until 1947. The two countries share English as a common language and are both democracies.
British exports rose to a record 25.1 billion in January, helped by a weakening of the pound since the start of the financial crisis. Ernst & Young’s Item Club said in a report last month that U.K. goods exports will probably increase 8.7 percent a year through 2020, compared with a 3 percent annual gain in the three years up to end 2010.
The trade minister helps promote British companies overseas, something Cameron said in July he wants to be the focus of U.K. foreign policy. Green stood down from HSBC in September along with chief executive officer Michael Geoghegan in the biggest management upheaval in the bank’s 145-year history. He started his new job in January and sits in parliament’s upper house, the House of Lords.