New Uk Govt To Labour For Better Trade With India

The priority of the new British government in its relations with India will clearly be in the field of trade.

Prime Minister Tony Blair said before the May 1 election that a Labour governments priority in its relations with India will be trade. The enormous opportunities for both nations have yet to be realised, he had said.

Trade between India and Britain has grown 70 per cent over the last three years. The annual trade between India and Britain both ways adds up to nearly $5 billion, although the balance is tilted somewhat to the advantage of Britain.

The trade boom came on the strength of the Indo-British Partnership Initiative launched in 1993 and the new Labour government has said it intends to build on that.

 

The significance of a trade boost with India and other developing countries arises from the domestic economic situation in Britain.

The Labour Party has pledged that it will not raise income-tax for five years. And it has pledged that it will improve the education system and the health service. Improvement on both these fronts will need an input of many billions of pounds.

With such commitments to the electorate, the new Labour government is expected to strenuously seek out markets for Britains manufacturers. India is one of the largest and most promising markets in sight.

But the critical test for the new government, an official said, is to balance economic possibilities against pursuing a politically aggressive policy over Kashmir.

A manager with an investment fund said it was revealing that Blair spoke of improvement in trade, not of increase in investment.

British investment in India has fallen after a small spurt in 1994 when it reached $136 million. The following year, the total investment came crashing down to $45 million.

Indian officials say, the area where trade and politics are most likely to conflict is defence. One defence agreement under discussion has been a proposal by India to buy Hawk trainers from Britain.

That deal could be worth $2 billion. Former member of Parliament Max Madden had opposed that in House on the grounds that India would use British defence equipment to crush the insurgency in Kashmir.

A whole new generation of trainers have now appeared for India to choose from. Defence experts have pointed out that the Hawk has now become outdated. But a good deal of cooperation on defence has continued traditionally between India and Britain in several fields. That has continued particularly over small and medium level defence needs rather than needs like frontline aircraft, submarines or tanks.

A former minister in the Conservative government, James Arbuthnot, (who has won his seat) had dismissed Maddens objections to a Hawk deal with India.

We shall not try to undermine our defence industry - unlike the honourable gentleman who would clearly like to undermine it by preventing exports to countries that have been friendly to the UK for many years.

Indian officials expect to continue to build on the Indo-British partnership with the new Labour government. We just want to get on with business as usual, an Indian trade official said.