To ask Her Majesty’s Government what steps they are taking to draw business opportunities in India to the attention of United Kingdom companies and to attract Indian investments in the United Kingdom.

It is a great pleasure to open this short debate this afternoon. I declare my interests. I am deputy chairman of HSBC Private Bank (UK) Ltd, I am a member of the advisory board of the UK India Business Council, and I was a member of the parliamentary delegation on a visit to India arranged last March by the Industry and Parliament Trust.

In addition, I declare, rather more informally, a long-standing interest in India and in British-Indian relations stemming from a three and a half year diplomatic posting to New Delhi in the early 1980s. The extended visit arranged by the Industry and Parliament Trust gave me the opportunity to take a snapshot of the new India and the opportunities now presented to British business. That led me to request this short debate today.

At this stage, I pay tribute to the work of the Industry and Parliament Trust. It performs an invaluable service in fostering better understanding between Members of both Houses and the world of business. I think my noble friend Lady Coussins may intend to say a little more about our recent IPT visit, but I want to place on record my gratitude to the IPT for arranging the visit and my admiration for the work it does. I also express my thanks to other organisations, including Virgin and KPMG for generously supporting our visit.

The Question I tabled asks Her Majesty's Government about promoting trade between the United Kingdom and India because I think it is timely to remind ourselves and others of the huge importance of India to our national economic well-being. I firmly believe that India is important to us in the short term, as we look at opportunities and the importance of trade with the emerging markets as vital components in extracting ourselves from the recession. In my view, it is important in the medium term because there are good reasons to believe that further deregulation of the Indian economy will offer real opportunities for important sectors of the British economy. It is important in the long term because I believe that India, the sleeping giant that I knew 25 years ago, is now wide awake and intent on developing into one of the major economic and political powers of the 21st century.

The UK’s business relationship with India is founded on three very solid pillars: first, India's stable democratic political system; secondly, its growing economic strength; and thirdly, our unique bilateral relationship. India's political stability is a vital anchor not just for British business interests, but globally. It was therefore with a mixture of relief and admiration that the world watched as 400 million Indians went to the polls in their recent general election. Any business operating overseas welcomes the reassurance of a stable political context in which to operate. The recent general election not only gave that reassurance but, in producing a clear result rather than a period of weak coalition politics as many pundits feared, it has offered India the possibility of firm political leadership at this time of global economic crisis.

India has not escaped from the consequences of the crisis, but for Indians it is a downturn, not a recession. India is still registering positive economic growth of the order of 6 per cent, having for some years been running at 8 to 9 per cent. This is a huge achievement, certainly for one who remembers the “Hindu rate of growth” of the early 1980s. The liberalisation policies of the 1990s transformed the Indian economy. Our hope must be that the recent election result will encourage this liberalisation process to continue in a way that will provide further real opportunities for British business.

The breadth of our bilateral relationship is the third pillar. It is certainly true at the political level, but it is so evidently operational in business relations and in the dynamism and excitement of the cultural relationship. The danger here for British business is complacency. Since we speak the same language, share 250 years of history and enjoy each other's culture and company, we might make unwarranted assumptions about each other that our competitors avoid. Nobody these days can be complacent in any world market.

How can we build on these pillars? I have five suggestions on which the Minister may care to comment at the end of this short debate. The first is to make sure we think through the give and take of our relationship with India. British business needs the help of the Indian Government. It needs them to introduce further measures of market access and deregulation in the sectors of financial and professional services, retail, education and defence to name a few of major interest to this country. Are we now working out how best to encourage this process by thinking where we can help in return? It may not be by reciprocally offering market access here because so much of this exists already. It may well be across our wider political relationship with India, whether it be in the Home Office over visas, climate change negotiations or on counter-terrorism. I believe we should take nothing for granted. We need to devote our scarce diplomatic resources to ensuring that, with India, we are partners of choice in multilateral forums and partners of habit in our bilateral dealings.

My second suggestion is that in our business dealings with India we concentrate on co-ordinating the work of the many agencies: the FCO, DfID, UKTI, the British Council and UKIBC. Promoting business with India is a crowded area. Certainly, on our recent IPT visit, I was impressed by the way in which these organisations were working together. However, there could easily be a degree of overlap, duplication and, at worst, competition.

My third suggestion is that we need to need to look for creative, innovative ways to encourage SMEs to look for opportunities to trade in both directions. How do small firms make the initial approaches, look for partners or undertake market research? At one end of the spectrum, small but adventurous enterprises that are willing to explore India need help and guidance to get going. The UKIBC is hard at work here, but are we devoting enough resources at regional level both here and in India to stimulate and inform this crucial SME sector?

My fourth suggestion is that we need to understand and anticipate the speed and extent of India's economic development. I have been much impressed by the recent work done by the UKIBC to promote India's emerging cities beyond the well known centres of Delhi, Mumbai, Chennai and Bangalore. There are real opportunities in the so-called "tier 2" cities. Are we doing serious research now into how we in the UK can penetrate further into what I would call “village India", that vast internal market of rural India? Do real opportunities exist? If not, why are mobile phone operators selling 15 million phones across India each month? Why would Tata develop the Nano car at a price that will take ownership beyond the urban middle class? Why would Hindustan Lever develop the Shakti programme to distribute its products to women in the villages? Of course, rural India has the most enormous issues of poverty and deprivation, but there is every evidence that Indian business is looking at how it can bring growth to this huge emerging market. We should keep an eye on it too.

Finally, we should encourage British firms that are operating in India to look at their corporate social responsibility programmes to ensure that they complement and support their business plans. In all conscience, it would not be acceptable for any significant enterprise in today’s world to operate in India without having a serious corporate sustainability plan, to contribute over and above the direct economic impact of the business to help in some way to address the social issues besetting that 42 per cent of the Indian population below the poverty line and the many others who are not far off it.

I am grateful for the opportunity to open this debate by raising these points. I do so not in a spirit of criticism but in the hope of making a contribution to the policy-making debate on a subject which I think is extraordinarily important to the United Kingdom.

On the eve of India's independence over 40 years ago, Pandit Jawaharlal Nehru made a pledge in his famous speech, “Tryst with Destiny”. He said:

“A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance. The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of our generation has been to wipe every tear from every eye”.

Has Pandit Nehru's dream come true? Sadly, not yet—nowhere near it. But we know more than ever that India today, as my noble friend Lord Janvrin has said, is an emerging global economic superpower.

I congratulate my noble friend on securing this debate on such an important issue. India’s success offers opportunities to us all. I am very proud to be the chairman of the UK India Business Council whose aim is to spread the awareness of business opportunities between Britain and India, especially among the small and medium-sized enterprises in all parts of the UK, in the regions and in London. Our mission is to increase trade, business and investment between our two countries in both directions.

However, the reality is that people have been very slow to realise the renaissance that India has been undergoing. I can give you an example. Whenever I speak to business audiences around the UK, I ask how many people are doing business in or with India. In a room of, say, 200 people, I do not exaggerate when I say that only a few hands go up.

In my own business I try to practise what I preach. In 2005, after a long break, we started manufacturing in India once again for the Indian market. After a year and a half of teething problems and settling in, we were soon producing in nine locations across India. We have an entirely Indian team operating in India, with sales increasing rapidly. For five years, India's GDP growth rate has averaged nearly 9 per cent. My own company is just one example of a growing trend and I know that there is enormous potential for partnership between the UK and India. The non-resident Indian community, the people of Indian origin in the UK, can be a real bridge between our two countries and ambassadors for both countries. The Asian population of this country makes up just 2 per cent of the population, yet contributes more than double that to the economy of this country. Where the UK and India are concerned, we are pushing at an open door. Our skills, experiences, common use of English, the rule of law, democracy and a free press all lend themselves to closer co-operation.

In November last year, I spoke at the Hindustan Times Leadership Summit in Delhi. I shared the podium with a remarkable young man, Chetan Bhagat, who, at the age of 35, has become the biggest selling author in India. In his speech, he spoke about what really matters to young Indians. He said that young Indians want politics of similarity and not the politics of difference and elitism and, above all, they want education.

There is a huge shortage of capacity and quality in education at every level in India—in higher education as well as in skills—and yet, to this day, foreign universities cannot open in the country. On the other hand, I am delighted to see that here in the UK we have numbers of Indian students increasing and record numbers coming here to study. Last year, I am proud to say that the UKIBC and the UK India Roundtable, of which I am a member, played a crucial role in ensuring that foreign students are now able to work in the UK for two years after they graduate. That will be a huge help to foreign students, particularly those from India. Our universities are fantastic. We punch above our weight continually: four out of the top 10 universities in the world are British. The number of Indian students now has increased five-fold to 25,000.

People are still not waking up to the India story. In 2006, Larry Summers, who at that time was president of Harvard and is currently the director of the White House National Economic Council, opened up the Harvard Business School research centre in India. He said that if, in 1991, when he was the chief economist at the World Bank, he had said that in 15 years’ time India, which at that time was nearly bankrupt, would have foreign exchange reserves of nearly $200 billion, he would have been called insane; and if he had predicted that a country that was nearly bankrupt would be growing at 9 per cent a year, he would have been called mad. That is the reality of India.

In 2007, when the UK India Business Council held an event, Jim O’Neill, the chief economist of Goldman Sachs and an advisory board member of the UK India Business Council, gave an update on the famous BRIC report on the rise of Brazil, Russia, India and China. He said that when it was first published in 2003, it was criticised for being too optimistic as regards India, but when he gave his update he said that in 2003 Goldman Sachs was not even looking at India as a country until the BRIC report. It revised its forecast and has now predicted that India and China could be two of the largest economies in the world by 2050. While the western world is in recession, the Indian economy is expected to grow at around 6.7 per cent, which is fantastic. The Indian middle class is growing very rapidly. It is already estimated at over 200 million and is projected to grow to over 500 million in the next 15 years. That is amazing. India saves 35 per cent and has woken up to the world.

Today, we had a meeting with the Confederation of Indian Industry. It confirmed that today, more than ever, India is looking west. Having chaired the Indo-British Partnership for six years and the UKIBC, I have seen this Government’s support for doing business in India go from zero to the £1 million a year we receive from UK Trade & Investment, which is fantastic. We are now generating our own income as well. It shows what a difference £1 million can make to the bigger picture. It is an example of public/private partnership at its best because we work closely with UK Trade & Investment, the British High Commission in India and the Indian High Commission over here.

We are seeing Indian investment here increase by leaps and bounds with Tata acquiring Corus and Jaguar Land Rover, hundreds of Indian companies investing in the UK, and trade between our two countries increasing rapidly with £10 billion of goods and services both ways. However, I still believe we are scratching the surface. Vodaphone’s purchase of Hutch in India has been an enormous success. In a short while, it set itself the target of 100 million users in India by 2010. It has already reached 74.1 million users.

Quantum leaps are being made. I always tell small businesses to go out to India and have a look for themselves. In 2004, there were 19 direct flights between the UK and India and two airlines to choose from. Today, there are more than 119 flights. British Airways alone has 43 flights per week to Delhi, Mumbai, Bangalore, Chennai and Kolkata, with flights to Hyderabad being added. However, there is so much more we need to do. The UKIBC recently released a report on emerging cities in India. They are cities we do not hear about over here, but they have enormous potential for British business—and for SMEs in particular.

We have all been lucky recently to witness one of the greatest spectacles in the history of democracy: a country of 1.1 billion people voting in five phases over nearly four weeks with nearly 60 per cent of the population casting their votes. Regardless of which party they voted for, each vote represented democracy, justice, empowerment and the right to be heard, and the winner with the clearest margin was democracy. With a leader like Dr Manmohan Singh at the helm, we can expect greater reforms in every area, economic liberalisation and the opening up of pathways to and from the country. However, we must respond with openness, and we are continually criticised by Indian business about visas, which I find very embarrassing.

I conclude by imagining India and Britain as two great rainbow nations in every way, and a rainbow stretching between the UK and India. The normal story goes that there is a pot of gold at the end of the rainbow, but there is a pot of gold at both ends of this rainbow.

I, too, am grateful to my noble friend Lord Janvrin for securing this debate. First, I put on record my thanks to the Industry and Parliament Trust for organising the delegation to India last March, of which I was fortunate to be part. Although it was my first visit to India, the advance briefing sessions organised by the IPT were detailed and wide-ranging and were reinforced by helpful sessions in Mumbai by UKTI and the British Council.

I wanted to go to Mumbai and Chennai to see what I could learn about how Indian businesses are responding to the challenge of corporate responsibility and sustainability issues, in which I have a special interest. My remarks on this topic will pick up from where my noble friend Lord Janvrin left off. I am also interested in the value placed by employers on language skills in the workforce and the impact of that on economic success. Finally, I wanted to learn something about the place and role of women in the labour market. On all three counts, I learnt a great deal, and I believe that British business could also learn a great deal and benefit from the closer economic ties with India that more relaxed regulation should encourage.

In the UK, my professional work is advising businesses on corporate responsibility, but I should perhaps declare here for the avoidance of doubt that I have never worked in any paid or unpaid capacity for any of the companies that we visited in India, or those whose names I shall mention today. I am aware that, in some cases, companies in the UK are still at the stage of needing to have the basic business case for social responsibility spelled out to them. In India, there seems to be a different, much more open and positive, mindset about this issue that UK companies looking to take advantage of business opportunities in India should appreciate.

We should not, of course, underestimate the different social backdrop against which these comparisons are made: the grinding poverty of India is overwhelming and 240 million people live on less than a dollar a day. Only 3 per cent of the workforce pays taxes, the remainder being in the so-called informal sector. Basic infrastructure like road building, rubbish clearance and public transport are desperately inadequate, and the culture of corruption is still rife across much of commercial and public life. However, perhaps because of all these things rather than despite them, leading-edge companies in India have understood and mainstreamed their corporate responsibility programmes in an impressive way. This goes both for Indian companies like the Supreme Group, Tata or the Bollywood studios, as well as for the vast big-name multinationals operating in India, such as BAe Systems, HSBC, Shell, Cadbury or KPMG. Of course, there is Hindustan Unilever, which my noble friend Lord Janvrin also mentioned, which, although part of Unilever's global operations, is uniquely permitted by the company to have its geographical designation of Hindustan in front of the word Unilever in recognition of its groundbreaking corporate history in India.

I have time only to mention briefly a few examples of what some of these companies are doing, but the best place to start is to quote Jamshetji Tata, the founder of the Tata Group, who said as long ago as 1904:

“In a free enterprise, the community is not just another stakeholder in the business, but is in fact the very purpose of its existence”.

This is a good summary of the philosophical case for embracing corporate social responsibility. The community comprises your future consumer base, future workforce, future investors and future shareholders, so it is nothing more nor less than enlightened self-interest which should drive responsible business practice in the interests both of commercial success and social benefits.

In Tata's case, it has identified the opportunities offered by the growth of the so-called second-tier cities in India as a focus for backing a massive road-building programme, which, together with their new environmentally friendly Nano cars, will offer new routes to market for millions of rural producers. Prospective UK investors and businesses would also do well to look at the second-tier cities and not just target the obvious places like Mumbai, Chennai, Delhi and Bangalore.

I will also mention the work that we heard about at HSBC in Mumbai, which sets a genuinely global standard in understanding what corporate sustainability is all about. Through partnerships with NGOs, its programme empowers rural women with economic and educational skills and experience. This results in possibly the only real example of the achievement of social mobility we saw and, of course, helps to provide HSBC with a broader base of customers and workforce for the future.

An excellent example of corporate social responsibility delivering a win-win situation in both India and the UK is the manufacture of sustainable packaging by the Supreme Group. Accredited by the Fairtrade Foundation, Supreme's eco-friendly and ethically manufactured bags not only provide much employment in state-of-the-art factories in south India, they provide the bags for several UK supermarket chains including Tesco, Sainsbury and the Co-op, which helps these companies meet their own environmental targets—and the rest of us to use less plastic.

I also want to mention the concept of social enterprise, and one particular example in Mumbai which demonstrates brilliantly what can be achieved by an ambitious young individual trained in business and economics who wanted to put her skills to use by meeting a social need through the medium of business. This was a young woman who established a company called Dial 1298, which is Mumbai's—and probably the world’s—first sustainable ambulance service. Mumbai did not have an ambulance service that served the whole population, free and on the basis of need. Sweta Mangal decided to set one up, which would sustain itself by charging people who wanted to be taken to private hospitals, so that a free service could be provided to everyone else. The company now attracts independent investment, and receives technical advice from the London Ambulance Service, which Sweta Mangal had come across herself when she was a postgraduate student at the LSE. The company is seeking further investors and partner organisations so that it can roll out the 1298 service in eight more Indian cities and the entire state of Kerala over the next five years. I ask the Government to ensure that opportunities to engage with social enterprise in India are drawn to the attention of UK businesses in the same way as more traditional, profit-making commercial opportunities are.

Sweta Mangal's postgraduate study outside India is a typical story, which is also relevant to why India's economy is so healthy. Well-educated Indian graduates are hungry for experience and opportunities and their confidence, ambition and willingness to take risks is an attitude the UK could learn from. In a global market, and with multilingual skills as well as top-notch scientific credentials, Indian graduates are in a position to exercise a significant competitive edge over UK graduates in the jobs market. I hope that the Government will do more to encourage UK graduates to seek post-graduate and work experience in India, in order to broaden their horizons and enhance their competitive position.

I read an article in the Hindu newspaper while I was there that seemed to sum up the attitude I was talking about. It was about how teachers at a Chennai training centre, which offers courses in 26 languages, were reporting a surprising new demand for learning Swedish. This turned out to be because Sweden had recently relaxed its visa requirements, which in turn had opened up educational opportunities for Indian students, who were seizing them with great alacrity and making sure they learnt Swedish first. India expects to be the world's second largest economy by 2050. Despite the obstacles of scale, India has lessons to teach the UK and business opportunities to offer, both here and there. I look forward to hearing from the Minister how the Government intend to make sure the UK learns from, contributes to and benefits from India's economic success.

First, I take this opportunity to thank the noble Lord, Lord Janvrin, for this important debate. The noble Lord could not have chosen a better time because a number of key events have taken place over the past few weeks both here and in India.

First, we had the general election—a point well made by the noble Lords, Lord Bilimoria and Lord Janvrin, in the world's largest democracy of 1,000 million people. The sheer scale of the operation beggars belief. Over 650 million voters went to the polls over a few weeks to elect a new Government. That is twice the number of electors in the whole of the European Community. It was almost a faultless performance with the use of electronic computerised voting machines. Unlike Iran and Zimbabwe, there were no allegations of vote rigging. The most important part of the process was that a substantial number of voters participated. That puts our European elections to shame when the mother of democracy cannot get even half her electors to the polls. The results demonstrated a strong Congress Government. Communal politics have been cast aside and the fundamentalist parties could not dent the desire of Indians to have a secular country. Look around the subcontinent; while the rest of the neighbours are faltering to maintain the semblance of a democracy, India has emerged as one of the most important, mature democracies in the world.

Secondly, I draw attention to the meeting held between the Federation of Indian Chambers of Commerce and Industry and the Indo-British All-Party Parliamentary Group on 9 June 2009 at the House of Lords. We were delighted to welcome Dr Amit Mitra the chief executive of FICCI and its director Harsh Pati Singhania. The meeting featured the former President of India, Dr APJ Abdul Kalam, who spoke about the global sharing of knowledge and resources to improve development. The dialogue between the two groups revealed the extent of the opportunities and the enthusiasm on the part of Indian businesses to interact and forge relationships with UK business. That has been achieved to some extent with big business and large corporations. However, it was revealed that the UK's reception of Indian business teams is the weakest in Europe. France, for example, hosted bilateral trade talks with Indian and French businesses, with over 200 French corporations represented. The UK is also under-utilising its small and medium enterprises in its trade relations with India.

FICCI noted specifically that it has a dynamic and growing corporate sector, which is interested in working with UK SMEs. Unfortunately, all requests to the UK Government and business organisations have received little or no response, other than some of the initiatives taken by the noble Lord, Lord Bilimoria, and others. I hope that the Minister will have some comment to make on that point.

While UK regional development authorities, such as the UK India Business Council and the CBI, work on SME-related issues, they are all disjointed and work on piecemeal projects. As a result, no one knows what is happening on a regional or even a countrywide basis. The main deficiency is the absence of a single co-ordinating body that is able to mobilise a quality, robust SME group that could engage in large-scale business-to-business meetings. FICCI, for example, has been doing this with all other European communities, such as France, Italy, Germany, the Netherlands and Spain. Why not the United Kingdom?

This is a longstanding problem. There is an urgent need to have a co-ordinated effort from the UK to get Indian SMEs and their UK counterparts to engage in an exchange of bilateral trade. We are looking for the Government to take some kind of leadership role and harness the UK's SMEs. The advantages of this approach are two-fold. It will generate enormous growth in entrepreneurial activity, which is one of the most important forms of economic growth in the recession. With ordinary avenues of employment shut down, many highly skilled individuals are unemployed. Their skills need to be harnessed and the self-starters encouraged in engaging in creative, innovative work. Secondly, it is highly advantageous for the long-term eradication of poverty in countries such as India, where entrepreneurship is often the only way out of poverty.

However, it is also important that people who become wealthy, who are able to generate large sums of money, do not take a top-down approach. The development of the country as a whole needs to be linked to the increase in high-net worth individuals so that the generation of wealth does not create a country of rich and poor but rather a healthy economy which helps to alleviate the dire poverty which affects all of them. According to the World Bank, small and medium enterprises are essential for dynamic economic growth and job creation. The sector in India has been hit hard by the current downturn with credit growth slowing and demand falling in both domestic and export markets. Improving access to finance for this sector is the key to long-term development. This cannot be achieved without robust attention to the role of women in the formal and informal sectors. Hard work alone is not enough to promote economic mobility. Organized dialogue in all sectors and also across urban and rural areas between India and the UK is the key to achieving millennium development goal number one: the eradication of poverty.

India is often criticised for its government, particularly in relation to its bureaucracy. It is said that Britain invented bureaucracy and that India perfected it in triplicate. However, let us remember that there are more than 1 million self-help groups, many supported by NGOs, which are creating a grassroots revolution. The magnitude of this invisible groundswell is much larger than Grameen Bank. The positive side of the Indian economy is its strong financial institutions. There is a great challenge ahead: the demographic dividend can be prevented from becoming a demographic deficit. We salute the major conglomerates like Tata and others, which have shown what can be done in their contribution to India’s economy. They may not feature in a list of the world’s richest millionaires, but their contribution to alleviating poverty and promoting educational programmes is second to none.

I am delighted that the Minister is responding to this debate. I do not wish to make him uncomfortable, but I will pose questions. Why is there not an exemption from social security contributions for Indian professionals on short-duration visits from India? They pay social security contributions despite no social security benefits being available to them. If Belgium, France and Germany can do this, why can the United Kingdom not do it? Bilateral trade is also impacted by our visa regime. I do not criticise the points system, but repeated attention is drawn to the difficulties of obtaining a visa. We are not talking about immigration, but we should make sure that business visitors and senior providers are facilitated to travel to the UK to explore business opportunities and business contracts. Will the Minister not accept that timelines are short in the business world? We need clarity, uniformity and transparency in visa and work permit procedures. An example is the IT industry. It is particularly impacted by issues such as delivery of service, which is dependent on movement of professionals at short notice.

Medical tourism requires examination. There are difficulties with insurance portability and the three-hour flying rule that preclude UK patients getting treatment in India. Should we not look at regulatory changes here? Then there is the classification of Indian products. A case in point is the Indian whisky made not of malt but of molasses. It cannot be sold as whisky here, so now the British Government term it rum. Something must be fundamentally wrong. I do not wish to undermine the quality of Scotch, but India consumes a substantial amount of Black Label, yet it cannot reciprocate by selling its own product in the United Kingdom.

I welcome Patricia Hewitt's appointment as chair of the UK India Business Council. More than that, I welcome the valuable work that has been undertaken by our own Industry and Parliament Trust and the work of Sally Muggeridge.

Finally, in the 17th century, Britain entered into trade with India in the name of the British East India Company. That was 250 years ago and provided us with 250 years of British rule. I promise one thing: Indians are not here to establish Indian rule or an Indian Raj, but they can surely show a way out of the dire economic predicament in which we find ourselves.

The noble Lord, Lord Janvrin, is to be congratulated on introducing this debate and drawing attention to the outstanding opportunities for investment and trade between the United Kingdom and India, to which many of your Lordships have referred.

India has always held a special fascination for the English. I do not think that we, today, fully realise quite how much, in relatively recent times, India dominated the thoughts and aspirations of so many English men and women. India, with its huge diversity and its immense variety of scenery, culture and climate still retains its fascination—a fascination almost mesmerising, as one sees the country rising from nowhere to become one of the foremost economies in the world, as commented upon by many of your Lordships, including the noble Lord, Lord Bilimoria.

Reforms in the 1980s and 1990s have allowed business the freedom to develop, and one can only stand in awe at the release of the energy and vitality of India's 1.2 billion inhabitants, which has driven the economy forward and enabled the development and manufacture of increasingly sophisticated goods. Anyone who revisits today one of the main Indian towns after a gap of as little as three or four years will hardly recognise the place. It is unquestionably an economy and a country in which British companies should be heavily involved. As well as an enormous and fast-growing market place, there are other advantages, such as no language barriers, a generally warm welcome to the English, a legal system which is at least comprehensible and a skilled workforce which grows in number on a daily basis.

Equally, we should welcome Indian investment in, and involvement with, the UK economy. Sadly, recent events have not shown Her Majesty's Government at their best. The Foreign Secretary's recent visit to India was not a success. It is a mystery to me how a Government such as the present one, with their record of failure, can have the temerity to start dictating to others how to run their affairs—especially a country like India which is currently demonstrating such success.

Closer to home, there is the case of Tata, owner of Jaguar Land Rover and other major investments in the UK. I read in the press that, because of the economic downturn, Tata is now seeking further working capital on normal commercial terms—although from banks; there would be government involvement. I am unable to comment on the merits or otherwise of this request, but I hope that Her Majesty's Government will bear in mind that Tata, as has been mentioned today, is a serious Indian company and not the sort of business out for the quick kill, but here for the long term. It is one of the largest and most highly respected companies in India and all the work of such organisations as UK Trade and Investment, and the other organisations that we have heard of in the debate today, will become pointless if Indian investors see that a company of the stature of Tata is not treated with respect and straight dealing.

I ask the Minister to help avoid creating an example to potential Indian investors as to why they should avoid the United Kingdom. There is great affection in India for this country, and it would be a pity for anything to damage that goodwill.

I congratulate the noble Lord, Lord Janvrin, on securing parliamentary time for this important debate. I am glad to have the opportunity to discuss the issues that he and other Members of the Committee have raised this afternoon. It has been a wide-ranging and fascinating debate. I confess an interest in as much as I live in Southall, a centre for Indian businessmen, and have a love of Indian literature and culture.

This is a historic moment for India. Less than a month ago, we witnessed the conclusion of the elections in the world’s largest democracy, an election that has returned a Government with an increased mandate to drive forward economic reform—a point emphasised by the noble Lords, Lord Bilimoria and Lord Dholakia. I am confident that India’s commitment to the liberalisation of its economy can only be strengthened and will continue, because here is a Government who genuinely understand that opening up the economy will create a quantum leap in India’s ability to attract foreign investment, accelerate much needed infrastructure development and drive forward inclusive, sustainable growth.

India is not immune from the global downturn. It no longer remains on the sidelines of the crisis. Growth is likely to fall to 4.5 per cent in 2009 from the 8.5 per cent average of recent years. It is estimated that there will be an extra 9 to 12 million Indians living in poverty in 2009 as a result. While 6 per cent growth might seem high to us, for India to achieve its millennium development goals and lift the 456 million Indians who live on less than $1.25 a day out of poverty, it needs to deliver sustained growth of at least 9 per cent a year. Unlike in China, the population is getting younger, but India will be able to reap this demographic dividend only if it makes substantial investments in its physical and social infrastructure. UK companies have much to offer in this respect, as the noble Lord, Lord Bilimoria, reminded us in relation to education, for example.

Since 1991, India’s gradual opening up to international trade has fuelled consistently high economic growth that has made a real and substantial impact on people’s lives in India. Now India is entering a new phase—it is moving up the value chain. Whereas the early years of its growth were fuelled by offshoring and low-cost, low-value service provision, the emphasis now is on value-added, R&D-rich, manufacturing and services—from ground breaking new oncology treatments in the pharmaceuticals sector, to highly sophisticated knowledge process outsourcing, to world-class, innovative production in sectors as diverse as nanotechnology, animation and renewable energy.

As the noble Baroness, Lady Coussins, and the noble Lord, Lord Bilimoria, remarked, we are witnessing the beginnings of a geographical shift to the tier 2 and tier 3 cities of India, where new clusters and new opportunities are emerging and where those who have not so far benefited from India’s awakening will have a chance to do so.

For UK companies to maximise their potential for success in India, they need to understand that the Indian market of today is not the same as it was 10 years ago, or even five years ago; the opportunities, the challenges, and the business environment have moved on, and so must the mindset of any UK entrepreneur seeking to engage with India. There is a critical need, therefore, to raise awareness in the UK of the new opportunities emerging in India so that our companies can maximise the potential from this challenging, exciting and important market. We were urged in that direction by everyone who contributed to this debate, especially the noble Lord, Lord Dholakia. I am delighted, therefore, that on 9 June, during World Trade Week, my noble friend Lord Davies, Minister for Trade, Investment and Business, officiated at the UK India Business Council launch of a detailed report on the opportunities that exist in tier 2 cities in India. The UKIBC will now work in partnership with our UK trade and investment staff in India over the course of the coming year on outreach activities in these cities, aimed at alerting and demonstrating to British business the opportunities that they represent.

I have a couple of comments on UK social responsibility—an area that I declare an interest in as I am still the vice chair of the Ethical Trading Initiative. Benoy, an architecture firm based near Nottingham, builds retail malls in tier 2 cities in India. It is very successful. It built 50 houses for low-income families at the same time as building a mall. I was interested in the comments made by the noble Baroness, Lady Coussins, about the Tata approach on enterprise and the responsibility to community, and the Supreme Group and its eco-friendly bags. I was even more interested, as my young daughter is currently studying for a degree in paramedics, to hear about the Dial 1298 sustainable ambulance service. I would be fascinated to hear more about that. A point was also made about the opportunities for UK companies to engage with social enterprise.

If there was a difference in the analysis, I felt that the noble Lord, Lord Dholakia, did not fully recognise the work going on by the UKTI network. We have 86 staff working in nine offices in India—an increase of 18 per cent over the last couple of years. These new staff include a financial services specialist seconded by the Treasury to the Deputy High Commission in Mumbai, and a new deputy director based in Delhi to oversee the UKTI network in India. The team has a real record of success, generating nearly £270,000 in chargeable services last year, providing support to nearly 3,000 British companies seeking to do business in India.

As a matter of interest, 90 per cent of UKTI customers are SMEs; 50 per cent of all Indian investments in the EU are in the UK. The British Chambers of Commerce work closely with the UK Indian Business Council and the UKTI to help SMEs to get into India. The UK Indian Business Council has a special programme called Next Generation, which helps new young entrepreneurs and SMEs break into Indian markets. I do not feel competent to comment on the rather complex rum deal in relation to—

I was reflecting the views of those at the Federation of Indian Chambers of Commerce and Industry. Those are the people at the other end who know precisely what is going on in relation to the business issues that I was talking about. It was their reflection and if they do not know, it is no good saying, “This is what we are doing”. It is about time those people at the other end are informed about the activities the British Government are undertaking in their country.

I will reply to the noble Lord on that point to ensure that we are doing as he says.

I will give a few examples of the recent successes that UKTI in India has been involved with in the last three months. It has helped Pavers Shoes, a Yorkshire-based family firm, with plans to set up a manufacturing facility in India and collaborate with local partners to set up 1,000 retail outlets across the country. It helped Sheffield Forgemasters to win a £30 million contract in March as part of a technology transfer deal with Bharat Heavy Electricals Limited. In February, it supported Integrated Project Management Limited in winning the supervisory project contract for the expansion of Chennai airport. Of course, UKTI has been instrumental in supporting some of the biggest UK commercial deals in India, such as Cairn Energy’s oil project in Rajasthan, which will provide 20 per cent of all of India’s domestic oil production, and Vodafone’s $11billion acquisition of Hutch Essar, the biggest ever British investment in India.

It is through this commitment that UK exports to India in 2008—the latest year for which figures are available—were at £5.9 billion, an increase of 49 per cent on 2005. The UK is now the third biggest exporter to India. There is no room for complacency, but that is surely not a bad track record. We would all like to improve the situation, but on that basis I would rather see the glass half full than half empty, as it was in the assessment of the noble Lord, Lord Howard.

We can achieve far more in India. That is why, in 2007, in response to a recommendation by the Trade and Industry Committee, we decided to set up and fund a new organisation—the UK India Business Council. The UKIBC receives £1million of grant funding per year from UKTI and is on course to achieve full match funding from the private sector by the end of its third full year of operation. It plays an important role in supporting our efforts to raise awareness of the opportunities in India—something that all contributors to the debate have emphasised, and they are surely right.

The UKIBC’s programme plan for 2009-10 has an ambitious set of objectives. It aims to advise at least 800 UK companies through the course of the year, referring at least 400 of those to UKTI for specific, bespoke support. It will also continue to produce research and conduct awareness-raising events throughout the UK, support us on ministerial and other high-level visits and on the full range of bilateral trade issues that we address under the banner of the Joint Economic Trade Committee.

The UKIBC has a real asset in its board members, its staff and the networks of entrepreneurs and business leaders that it has created in order to capitalise on the opportunities of the new, emerging India. I would like specifically to mention the noble Lord, Lord Bilimoria, the chair of the UKIBC, whose visionary leadership, dynamism and passionate commitment has been instrumental in driving forward our relationship with India. He will step down as chair in July, and we sincerely thank him for his marvellous efforts. He will be succeeded by Patricia Hewitt. I am delighted, however, that he has decided to stay on as president of the UKIBC and will still be playing a role in the organisation in the years to come. We will only benefit from that experience.

The scope for increasing bilateral trade between the UK and India is limited by the fact that, despite 18 years of economic liberalisation, some key sectors in India remain closed or partially closed to foreign competition. There are regulatory hurdles and legislative barriers that prevent our banks, accountants, law firms, retailers, insurers and educational institutions, to name but a few sectors, from competing in the open market. The Joint Economic Trade Committee was launched in 2004 to address these market access issues so that both countries can benefit. They will benefit if there is more open trade.

When my noble friend Lord Mandelson co-chaired the last JETCO meeting in Delhi with Kamal Nath, the then Indian Commerce Minister, in January, he emphasised the advantages to the Indian economy of opening up to wider competition. He also stressed that UK companies were mindful of the perceptions that some in India had of the perceived threat to domestic concerns of market opening, and that is why we have factored these issues into our lobbying strategy. For example, my noble friend Lord Mandelson launched a financial inclusion strategy during his visit, the aim of which was to raise India’s awareness of the extent to which UK financial service companies are committed to participating in an inclusive growth agenda. Similarly, the UK accountancy bodies have worked with their Indian counterparts on mutual recognition of qualifications.

I am conscious of the time, so I should like to end on inward investment. Around 600 Indian companies have a base in the UK, of which approximately two-thirds are in the ICT/software sector, the next significant knowledge sector being pharmaceuticals. Their investment is worth around £9 billion, and the UK attracts around 50 per cent of all Indian investment in Europe.

The success of Indian entrepreneurs in the UK is well known in India. India has entrepreneurial talent and is a priority market for UKTI’s Global Entrepreneur programme, supporting links between exceptionally talented entrepreneurs and their counterparts in the UK.

India is a young country; 40 per cent of the population is under 15. As we heard from the noble Lord, Lord Bilimoria, it has a young mindset. Challenges are huge as regards poverty, social exclusion and literacy but, if the economy opens up, UK companies have a lot of expertise to offer and can drive forward long-term, sustainable and inclusive growth. Once again, I thank noble Lords for the opportunity to debate this vital issue. If there are one or two points that we have not covered, we shall do that in writing.