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The UK and India have held an economic and financial dialogue, discussing ways to strengthen mutual cooperation and boost bilateral trade and investment, while businesses signed new deals worth over GBP1bn (USD1.64bn).
The talks were held on July 25, when the two countries agreed to work together to manage the risks the global economy currently faces and addressed the uncertainty and wider problems in developed and emerging economies. A joint statement issued by the UK's Chancellor George Osborne and the Indian Finance Minister Pranab Mukherjee further emphasized this point, and stressed that both governments are alert to the continuing challenges facing businesses and individuals from rising food and fuel prices, fiscal imbalances and volatile capital flows. According to the statement, such challenges cannot be tackled alone, and commitment to multilateral cooperation is now more vital than ever.
The statement goes on to say that each country is taking determined action to address its fiscal imbalances and is working to strengthen its business environment. It makes clear the commitment to the implementation of credible, medium-term fiscal consolidation plans, in line with the G20 Framework for Strong, Sustainable and Balanced Growth. The statement adds that the UK and India have agreed to work together in the G20, the International Monetary Fund, the Financial Stability Board and other international financial institutions in the key areas of strengthening economic surveillance, capital flow management and financial sector reform, to increase the resilience of the global economic and financial system. The two sides will also deepen their dialogue and technical cooperation to reduce distortions in commodity markets through the G20. The statement reiterates the desire to see the conclusion of an ambitious and balanced broad-based EU-India Free Trade Agreement by the end of the year, and emphasizes the commitment to the achievement of a development-focused outcome on the Doha round.
The ministers also discussed the Indian government's proposals for the widening of the financial sector in order to develop a more efficient distribution of domestic savings into long-term financing. The statement welcomes the partnerships and joint ventures between the UK and India in the insurance sector and notes that the governments look forward to the widening and deepening of such partnerships. The role played by foreign banks in driving innovation, furthering inclusion and encouraging new technology into the market was also raised. UK banks make up 50% of all foreign bank branches in India, with the UK home to more branches of Indian banks than any other country in the world. The UK hopes to see the the opportunity for its banks to grow businesses in India on a level playing field, were they to locally incorporate.
Bilateral trade reached GBP13bn last year, up from around GBP11bn in 2009. UK exports to India increased by 28% in 2010, with goods imported from India rising by 27%. In addition, India is the UK’s third largest investor, with around 700 Indian companies with investments in the UK, and the UK receiving more than 50% of India’s investment into Europe.
A number of commercial deals were also signed during the talks. Last week, the UK became the largest inward investor into India, with the Indian cabinet approving a USD7.2bn BP-Reliance deal, which the Treasury says could eventually be worth up to USD20bn. At the dialogue, Essar Energy announced an investment in the UK oil sector, with UK banks delivering USD1.5bn in financing for the deal. Benoy signed a new contract and announced two further contracts, while UK SME Network Mapping inked a new contract with Sterlite, a subsidiary of the Vedanta Group. Serco secured the approval of its recent GBP385m acquisition of leading Indian Business Process Outsourcing provider Intelenet, and Centum and Tata Motors also made deals.
Commenting on the deals, the UK's Business Secretary Vince Cable said: “We have witnessed the real benefits this partnership can bring and I would like to congratulate the companies who have announced or signed deals. As our enhanced partnership continues to develop, I am delighted that innovative UK SMEs are also able to find commercial success in India and to see progress in investments between both countries.”
The next round of bilateral talks is scheduled for 2012.
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