Towards a holistic relationship

The 126-fighter jet deal has political overtones and cameron is likely to push its case strongly with the Indian leadership

British prime minister David Cameron will miss Myanmar’s military ruler Than Shwe by a mere day during his visit to India, but both leaders have weapons on their minds: Trials for India’s 126 medium multi-role combat aircraft (MMRCA) deal, worth $12 billion, concluded earlier this month, and it is said the news is “good” for the Eurofighter Typhoon — a joint production of the UK, Germany, Italy and Spain — compared to its Swedish (Saab Gripen IN), Russian (MiG-35), French (Dassault Rafale) and US (Lockheed Martin’s F-16 and Boeing’s F/A Super Hornet) rivals.

In these testing times of recession, the award of the 126-fighter jet deal to any of these countries will not only significantly bump up its bottom line, it will also effectively send out a signal to the nation on which India wants to bestow her affection. That is why this deal has strong political overtones — and Cameron is unlikely to lose an opportunity to push its case with the Indian leadership.

With Britain likely to post a mere 2.6 per cent growth rate this year, Cameron knows he’s got to kick-start the economy. Britain must live up to its reputation of being the world’s biggest shop-keeper by not only finding more creative ways of pursuing trade and inward investment, but also reorient foreign policy tools such as international aid.

That is why the acquisition by Tata Steel of Corus, worth £ 6.7 billion when it was concluded in 2007, then India’s largest deal, and by Tata Motors of Jaguar Land Rover (JLR), worth £ 1.15 billion, are always the focus of such attention. Tata employs 15,000 people at JLR’s three factories in the UK and believes that expansion into new markets, such as China, could sustain growth and minimise losses (although Corus had to lay off 3,000 jobs at its factory in Teesside).

R Gopalakrishnan, executive director of Tata Sons, discounted rumours of despondency in the UK market. “We are perfectly happy with our acquisitions. Both Corus and JLR are in their second or third year, we are not looking at making money so far. Moreover, we have no reason to regret the acquisitions,” he said.

Asked what strategic value the Tatas would have gained from investing such large sums of money in Britain, Gopalakrishnan agreed that Britain “had reached its peak decades ago, but the fact remained that it was an easy country to work in.” Moreover, he added, it’s not as if the Tatas decided one fine morning that they were going into the UK — it was a combination of factors that resulted in their doing so. “The strategic intent was to grow the international business, UK didn’t happen by design,” he added.

Among its assets, Gopalakrishnan counted off the English language, a good insight into Anglo-America as well as easier access into “new geographies” like the former Eastern Europe and China. (Over the last year, the Tatas have sold $3.6 billion worth of goods to China, including Jaguar cars.)

And, he added, Britain may look jaded on several counts, but it “still has very high-quality engineering skills.”

That may well be why bilateral trade is currently pegged at a respectable $12 billion (some say it has the capacity to reach $40 billion by the end of the decade), and that Britain, which was India’s second largest trading partner until 2002, has since been overtaken by China (due mostly to the import of iron ore from India), the UAE (Gulf trade) and Belgium (diamonds). But India remains the UK’s largest export market in the developing world, ahead of China.

FDI inflows from the UK into India are still weak, however, and focussed on oil and natural gas (Cairns) and telecom (Vodafone acquiring Hutch). New areas such as IT (India is the second largest presence from Asia in terms of projects) and bio-technology are gathering their spurs; Astra Zeneca has established an R&D centre in Bangalore, while Cairns Energy, Shell and British Gas have promised to speed up investment.

Britain’s loss as India’s pre-eminent political partner in recent decades has meant heightened interest in the US — especially after the Bush administration slam-dunked India to de facto nuclear power status — and increasingly, a wary circling of China. In recent weeks, with Delhi’s request to Moscow for enrichment and reprocessing technologies for use in the several nuclear plants that nations like France, Russia — and in the near future, the US — are going to be building in India, Britain’s own nuclear cooperation deal with India seems like a minnow among the whales.

British diplomats admit that British companies are willing to supply the full range of components that make up a nuclear plant, short of the nuclear reactor itself, such as turbines which go into the French Areva reactors; an MOU with L&T was signed in February for the manufacture of these turbines.

The message, said a well-placed British source, is that the UK is “much more open and communicative to India” after the passage of the India nuclear deal through the Nuclear Suppliers Group in 2008.

The British source pointed out that Cameron’s UK is focussed on areas like education, climate change and defence ties. India and the UK already have as many as 400 tie-ups in higher education, including the training of faculty, joint programmes and the building of research bases. “We are interested in educating India’s youth bulge, as it were,” he said.

But with India’s neighbourhood in such ferment, Indian diplomats say the time may have come for its friends around the globe to stand up and be counted on issues that matter to Delhi. On the question of terrorism, for example, Indian and British officials have often differed on interpretations between militants and freedom-fighters, with London persisting with imparting human rights to terrorists.

Things have often come to a head over Afghanistan-Pakistan issues, and in fact, even David Headley's confession to interrogators over the Pakistan intelligence agency, ISI’s involvement in the attacks, are being taken with a pinch of salt in London.

Moreover, as Gopalakrishnan pointed out, governments often tend to compartmentalise issues like security, labour, migration, climate change, trade and investment, and the time may have come to rebuild the whole, which is more than a sum of its parts.

“There is a great opportunity to build a relationship which is far more holistic. It hasn’t happened yet, but it certainly needs to,” Gopalakrishnan added.