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Volume 731: debated on Tuesday 18 October 2011

Question for Short Debate

Asked By

To ask Her Majesty’s Government what assessment they have made of economic, political and cultural relations between the United Kingdom and India.

It is a great privilege to initiate this debate. Since it is a common practice to declare an interest, I begin by saying that I have close ties with India, I actively participate in the public life of India, I have been a recipient of two of its highest honours and I am a member of the Indian Prime Minister's global advisory committee.

For us in the UK, relations with India are of the utmost importance. Britain shaped the cultural and political physiognomy of modern India. Indians are a significant presence in the UK: in your Lordships' House alone, they number about 15. India is also an emerging economic power, destined to play an important global role in the decades to come. It is therefore important that we should periodically take a careful look at relations between the two countries and ask how they can be strengthened yet further.

At the political level, there is considerable co-operation and mutual respect between the two countries. The UK is greatly admired for its good sense and maturity. However, there are important areas of disagreement. Given India's colonial past and view of the world, it does not share our enthusiasm for high-minded so-called liberal intervention in the affairs of other countries. It is also critical of our fluctuating policy in Afghanistan. India has also felt, both in public and parliamentary debate, that we misused the United Nations resolution in Libya to justify action that the resolution did not justify, and undertook actions such as equipping the rebel army that the resolution did not permit. This is why India voted, and continues to vote, in a different way from us in the United Nations, though it has not been openly critical of us. We should appreciate this difference of view and not allow it to stand in the way of good relations. This is what most successive British Governments have often done.

India's ambition to secure a permanent seat on the Security Council is legitimate. It has more than 1 billion people and represents a distinct voice in the global conversation. Its claim is no less weighty than China's, and perhaps weightier than our own or that of France. It is only a matter of time before India's claim is met, since about 120 members of the General Assembly have indicated their consent. We can expedite this and earn ourselves good will by, for example, moving a resolution in the General Assembly, on our own or with France, as we did in the case of Libya and as we have done in other cases.

For years, India has been a victim of cross-border terrorism and has repeatedly complained about it—but we did not take it seriously until it began to affect us at home. Even now, we have not shown sufficient sensitivity to India's deepest concerns. I am not suggesting, even for a moment, that India's policy on, say, Kashmir is right. Like many in your Lordships' House, and many in India itself, I have been greatly critical of it, and I wish that it had been different. However, that cannot justify the horrendous acts of terrorism that we have seen in Delhi, Mumbai and other parts of India. We in Britain could give India greater active support and enable it to sustain its open and democratic society.

At the economic level, our ties with India are strong but could be stronger. India is the second largest investor in the UK after the United States. More than 500 Indian companies are based in the UK, and their businesses generate more than £14 billion. Our visa regime stands in the way of intracompany transfers, and some Indian companies have begun to move to Belgium. That cannot be in our interest. We are the fourth largest investor in India, but our investment is about 5 per cent of its total foreign direct investment. That is a very small amount for a country of our size and stature.

India is expanding its infrastructure in a very big way, involving nearly 1 trillion rupees. We ought to be involved in a much more active way than we are. India does not need to raise money in the UK market: it has enough indigenous resources. What it needs is equipment, expertise, consultants, efficient organisation and experience. That is what we are ideally equipped to provide. I am sorry to see that we have not been involved as actively and comprehensively as we should have been in India's programme for the development of its infrastructure, such as roads, airports and energy plants.

Of course, India needs to do more itself. It needs to improve its bureaucracy and carry through its programme of reform to make itself a more attractive destination for foreign investment. However, that has not stopped other countries such as Malaysia, France and the United States from stepping up their investment. There is no reason why we should not do the same. Sometimes I have a feeling that we—or at least our companies—tend to be averse to risk and seek a guaranteed return before we consider investing. That attitude needs to change. It is only when we seek active engagement with India that we will have a moral right to put pressure on it to reform its policies.

I now turn briefly to an area that matters a great deal to me and to India: the field of higher education. India is expanding its higher education at an unprecedented rate. Nearly 700 to 800 new universities are expected, along with new Indian institutes of technology and central universities. There is enormous scope for Britain. The UK India Education and Research Initiative has made a significant contribution but we need to do much more. I welcome the announcement of UKIERI stage 2, but it will need significantly enhanced financial support from public and private sources. It also needs to be given a new direction and greater depth. For example, British universities should be encouraged to set up campuses in India. I assume that the Indian Government’s attitude will be a little clearer than it is at present. There is no reason why our great universities cannot adapt academic departments in Indian universities and build up their teaching and research capacities.

India badly needs highly qualified faculty staff, and here too Britain can do much. For several years I have been urging a scheme. We have a large number of professors who either have come to the end of their career and retired or wish to take early retirement. There is no reason why they cannot be persuaded or incentivised to spend a lot of time in India. They have their occupational pension guaranteed here, and the Indian Government could be asked to top it up and make it attractive for them to spend either a few years in India, or part of every year teaching and guiding research in Indian universities. A rough calculation suggests that there are at least 3,500 university professors in the natural and social sciences who, I am told, would find it attractive to go and teach and do research in Indian universities. We ought to tap into that resource.

University education is not the only area of co-operation. Much can and should be done at the level of secondary education. There could be sizeable exchanges of teachers. That would benefit both teachers and students in the two countries, and would build strong and lasting intellectual and cultural bonds. If I may digress for a moment: I have a family foundation, and it has been arranging exchanges of teachers between a top school here and a top school in India. During the three years that the scheme has been going, I have been struck by the enormous enthusiasm that the English teachers have aroused in Indian schools. A teacher of English from a top school here teaching Shakespeare in an Indian school has been a remarkable experience for Indian students, and I know from my close contact with that school that many students are immensely excited and have turned to literature as their special field of interest. If one school can do that, imagine hundreds of schools being able to do that.

Finally, I think the Government have made a great mistake in restricting post-study work visas. Under the current scheme, students coming here can work for two years after graduating. This allows them to recoup part of their expenses and to contribute their skills to this country. It benefits both sides. The restrictions that the Government are proposing are very rigid. Last year, 39,000 students were guaranteed a visa to work for up to two years. The Government want to reduce that by half, which is extraordinary. Germany has decided that students who have graduated will be allowed to stay up to a year to look for an appropriate job if they have sufficient maintenance funds. New Zealand and Canada have done the same. I am really sorry that we seem to be creating a situation in which we are discouraging Indian students from coming here.

My Lords, I thank the noble Lord, Lord Parekh, for initiating this debate and offer him my apologies for arriving a tad late in the Chamber. The joy of Divisions is that you get talking to a colleague or two outside, and it is funny how time flies, but there we are. Life is like that sometimes.

The noble Lord spoke very eloquently about the importance of the relationship between India and Britain. There are many in this Chamber and in our country, and I count myself among them, who have a very strong love and affinity for India. In my case, it is very personal. Both my parents were born in pre-partition India. My mother is from Jodhpur and my father is from Gurdaspur, so the cultural and family ties to the great country of India remain very strong. I am also reminded that we as a country share many strong ties with India. The Indian diaspora is very strong here in the United Kingdom. It is one of the strongest ethnic communities, if not the largest, here in Great Britain, but with that comes responsibility. The Indian diaspora here has responded most positively. If you look around Britain today, there are success stories in every field. In commerce, business, education and, dare I say, even in politics, you will see the Indian, Pakistani and Bangladeshi diaspora—the subcontinent that was greater India—today flourishing in every element of British society.

One cannot move forward and talk about India and Britain without mentioning sport. If one reflects, the noble game of cricket resonates in both India and England, although if we reflect on the current results between the two countries, the less said the better.

In the time I have today, I wish to focus briefly on business and commerce. When my right honourable friend David Cameron became Prime Minister, one of the first trips he made, along with leading lights from Britain, was to India. One of the things you do in government is give a very strong statement of intent. That intent is very clear: Britain believes not only in commercial ties with India, but in India itself. It is the largest democracy in the world. It has shown inspiration in its culture, history and people.

If you look at the Indian economy, many would be proud of it. I was reading a recent report that said that India’s growth rate slowed somewhat this year. When you see that it slowed to 7.7 per cent, you perhaps reflect on the strength and vitality of the Indian economy. When we read about India, we look towards its emerging middle classes. It is a very aspirant and ambitious nation and is making great strides in IT and technology industries. In the past week or so, I have had the good fortune to attend a couple of events. One was the Institute of Directors event that was organised by the Indian IOD. It was most heart-warming to see that one of the key areas of focus for Indian business is climate change. That again shows that Indian commerce and Indian business are responding not just to the needs of their nation but to the global challenges of climate change.

Yesterday, I attended an event organised by India800. It is not an organisation that I was that familiar with, but it kept my attention. It focused not only on the successes in India, which are many, but did not forget that poverty is still an important challenge facing India. There are between 270 million and 450 million people still living on a dollar a day in India, so the challenges are immense, but that is where business and commerce count. Therefore, I believe that it is incumbent on the British Government to extend their ties to India: ties of culture, education, to which the noble Lord, Lord Parekh, referred, and, most importantly, business. We in Britain have a large stake in India, but let us not forget that India has a large stake in Britain as well.

Ultimately, when we reflect on the two nations that are India and Britain, we are tied together by history, by culture and, most importantly, by people. It was the noble Mahatma Gandhi who said:

“A nation’s culture resides in the hearts and in the soul of its people”.

And India resides in the hearts and in the soul of Britain.

My Lords, I, too, apologise for my late arrival. I thank the noble Lord, Lord Parekh, for initiating this important debate. As a British Indian, I am delighted to participate in the debate on UK-India relations today. India is the largest democracy in the world. It has a population of over 1.2 billion, which is 17.3 per cent of all the people living on this planet. It is more than the population of the US, the UK, France and Russia combined. They are the four permanent members of the UN Security Council, so why is India not a member of the council? I am pleased that the UK supports India's membership of the UN Security Council. Therefore, I ask the Minister: how can Britain work with other UN nations to ensure that India has its legitimate place on the Security Council?

India gained its independence 63 years ago, and since then it has gone from strength to strength economically and politically. A country that rose from poverty and illiteracy to become an advanced country is now competing with the rest of the world. India is now an economic power which is recognised all over the world. Recently, the US Secretary of State Hillary Clinton said in New York that the US should learn from emerging powers like India and Brazil to put economics at the centre of foreign policy if it is to retain its position as a global powerhouse.

The legacy of the British Raj may have been a long freedom struggle, but it has created a lasting friendship between India and Britain. It is no surprise that India is now a major investor in the United Kingdom, and credit goes to people like Ratan Tata and many other businesses from India.

Our Prime Minister, David Cameron, and many Cabinet Ministers have visited India since the coalition Government was formed last year. These visits have seen the relationship between the two countries elevated in line with the Queen’s Speech in Parliament in May last year. I am also aware that many people in the House of Lords have close ties with India. My noble friends Lady Williams of Crosby and Lord Dholakia, and many other Peers, are heavily involved in working with India.

The strength of India can be explained in three words: democracy, diversity and diaspora—the three famous Ds. India is the largest democracy in the world. The transition of power between government and opposition has always been smooth. This may be a lesson to other neighbouring countries. This is what democracy is all about and this is what the world values.

India is a diverse country of many religions and cultures. Different religions are able to coexist side by side. The population of Muslims in India is greater than in Pakistan. Sikhs can build gurdwaras, Hindus can build temples and Muslims can build mosques, and they all live in harmony together. Let us not forget the Jewish community. The Paradesi Synagogue in Kochi in south India is the oldest active synagogue in the Commonwealth. It is important to note that in the past five years India has been represented by a Muslim president, a Sikh prime minister and a Catholic Christian leading the ruling party. Over 100,000 women play an important role in state and government initiatives.

There is a strong Indian diaspora of over 25 million people. They are contributing both economically and politically. We are loyal to Britain but our ties are never weakened as far as India is concerned. My own charity, the Loomba Foundation, is educating thousands of children of poor widows in India. I declare an interest as founder, chairman and trustee of the Loomba Foundation.

We want the Minister to inform us how he sees the links between India and Britain developing. We are equal partners in global politics and it is time to ensure that this is reflected in our politics on issues such as commerce, science and technology, immigration, defence, education and others.

My Lords, 2011 is the 20th anniversary of India’s economic liberalisation. In 1991, India was a closed, protected, insular, inward-looking country and economy. Over the last 20 years, India has taken a gigantic leap on to the world stage as an emerging global economic superpower. As we have heard from the noble Lord, Lord Ahmad, while our economy is struggling, India’s GDP is today is growing at over 7 per cent.

In 2003 I was appointed the UK chair of the Indo British Partnership by the British Government. Subsequently I was the founding chair of the UK India Business Council and am now its president. I have been privileged to accompany our current Prime Minister and both his predecessors on their visits to India, and the relationship between Britain and India is today stronger than ever.

Trade between our countries has increased from £5 billion a year in 2003 to £13 billion today. However, we are just scratching the surface. As the Indian Cabinet Minister Kamil Nath said when I shared a platform with him in London last week, investment has to be a two-way street, and we have seen huge investment going both ways. As the noble Lord, Lord Loomba, said, Tata is now Britain’s largest manufacturer, owning Jaguar Land Rover and Corus, British Steel. We have seen giant investments going the other way into India—for example, Vodafone.

My own business Cobra Beer formed a recent joint venture with Molson Coors, the last of the global giant brewers to go into India, and we now own the only brewery in the state of Bihar. I am a director of Booker Group plc, a FTSE 250 company, and the original sponsors of the Man Booker Prize, which is being announced this evening. At Booker we have just opened our second wholesale cash and carry branch in Pune after having opened up in Mumbai two years ago.

This investment has been happening but it is against a backdrop where actually very few reforms have been taking place in India. The major reform of air service between the two countries opened up in 2004, and now there are over 100 flights a week, but there are so many other barriers and so many reforms we are crying out for. As the noble Lord, Lord Parekh, said, foreign universities still cannot operate in India. British lawyers cannot operate and open up offices in India. British banks can only open a handful of branches a year. Our insurance companies can only own 26 per cent of Indian insurance companies. Lloyd’s of London is the world’s most important reinsurance market but India is the only major country in the world where it cannot operate to this day.

I chair the Cambridge-India Partnership Advisory Group and we have so many exciting plans for India, to build on our strong links going back to Jawaharlal Nehru and beyond. All these reforms, if they took place, would benefit India and would help it attract the $1.7 trillion of infrastructure investment it desperately needs. As members of the EU, we cannot even enter into a bilateral free trade agreement with India, but have to do this through the EU. Could the Minister inform us when the EU-India free trade agreement that we have been talking about for four years will actually be signed?

I thank the noble Lord, Lord Parekh, for initiating this really important debate. We sit together on the Prime Minister of India’s global advisory council. India is a country of two stories: an emerging global economic superpower on the one hand and a country where, as we have heard, hundreds of millions of people live on less than a dollar a day. India is a country where corruption has now reached tipping point in its prevalence and magnitude, leading to the emergence of Anna Hazare and the Jan Lokpal Bill.

There are those in the UK who say that we should not be providing aid to India. However, I have seen the amazing work that DfID, the British Council and our team at the British high commission are carrying out on the ground; for example, in Bihar, where we have our brewery. Bihar is a state of over 100 million people and one of the poorest states in India, but through sheer good governance it has been turned around over the last six years under the leadership of its inspirational Chief Minister, Nitish Kumar, and the Deputy Chief Minister, Sushil Modi. There are initiatives to provide bicycles for schoolgirls and uniforms and books for schoolchildren. The Chief Minister is recruiting 300,000 school teachers and introducing the Right to Public Service Act—all this is turning around the state. However, we are talking about a country of 1.2 billion people.

As a country, Britain is so close to India. Our relationship is wonderful and yet we shoot ourselves in the foot by introducing the new Immigration Rules. Until 2010, the number of Indian students had been increasing multifold. I am a member of the advisory board of the Judge Business School at Cambridge University and the Cranfield School of Management. Both institutions have seen a significant drop in the number of applicants from India, and I am hearing that the Indian students are saying, “Does Britain want us any more?”. What are we doing? Do we not want to attract the brightest and the best? Dr Manmohan Singh, India’s Prime Minister, is himself a graduate of both Oxford and Cambridge. My own family has been educated here for three generations. These are generation-long links.

What are the Government doing to rectify this situation? I am a member of the UK-India Round Table. I fought so hard for foreign graduates to work in the UK for two years after graduation, as the noble Lord, Lord Parekh, spoke of. There is a perception that this rule has been removed and this is deterring so many foreign students, especially Indians, as this is a way of earning extra money to pay for the expensive higher education and to gain some work experience in this country. To build bridges, can the Minister clarify the situation?

Our links with India are so strong, whether it is the armed forces, culture, sport, cricket or the four Indian Booker Prize winners. We could do so much more to further our political links; we could have more exchange between our two Parliaments. Could the Minister look into this opportunity to further our political links?

To conclude, the reality is that the whole world has woken up to “incredible India”. In the words of Dr Manmohan Singh:

“India is an idea whose time has come”.

India was highlighted in the Queen’s Speech by the Prime Minister as a country we want to have an “enhanced partnership” with. However, we need to do so much more. We are competing with the rest of the world to engage with India. Given our special relationship, we in Britain could do so much more to encourage British industry, particularly SMEs, to do business with India. If only India would implement all the reforms that have been on the cards for so long. If those two things happened, I would be happy, and in the words of Mahatma Gandhi:

“Happiness is when what you think, what you say, and what you do are in harmony”.

My Lords, I thank my noble friend Lord Parekh for securing this debate, and I declare my interest as chairman of Warwick Manufacturing Group at the University of Warwick.

In this debate, it is worth recalling the long history of Indian innovation. Some noble Lords may have visited the Qutb Minar in Delhi and seen the Iron Pillar which stands there unrusted since its forging a millennium and a half ago. For an engineer, the knowledge that Indian metallurgists were able to produce rust-proof iron is an inspiration still worth studying today. If the West had had such technology then, the history of the world might have been quite different. This reminds me of an important truth: only innovation and partnership can drive global progress.

As time is short, I shall focus on the economic aspects of the relationship between India and the UK. Britain used to have a dominant position in Indian trade, but we now account for less than 1.5 per cent of Indian imports. India’s desire for economic independence and Britain’s post-war atrophy both contributed to decades of decline in our partnership. India was not an easy place to do business—but while Japan helped build the Maruti and more, Britain still stood for the Morris Ambassador.

Since the early 1990s, when the then Foreign Secretary liberalised India’s economy from the finance ministry, India has enjoyed huge growth, topping 8 per cent a year. Indian GDP has more than trebled in that time and per capita GDP has grown by over a thousand dollars. So it is no surprise that everyone is trying to woo India. This weekend I was in Mumbai, as I am once or twice a month, and the number of businesses and delegations there to drum up trade is astonishing.

The noble Lord, Lord Heseltine, anticipated this growth in 1993, setting up the Indo British Partnership. He was the first to consider India as equal, with the equally charismatic Richard Needham as Minister of State, with whom I had the pleasure of serving as a founding board member. The Indo British Partnership was a business-led initiative. Our partners were not the Government but the Confederation of Indian Industry. This gave British business a real profile for the first time, and our exports to India surged by 10 per cent a year in the 1990s, increasing to 14 per cent since the millennium. Yet this did not prevent our share of Indian imports falling from 6 per cent to a mere quarter of that. The perception was that Britain was more interested in Europe and the Atlantic alliance. What is more, the language we used was often counterproductive. Britain should not appear to be lecturing to India with haughty superiority—and it is still there. I hope the new Government will avoid such pitfalls. The early visit to India by David Cameron was recognised as a very good start.

I have persuaded a number of Indian businesses to invest in Britain, so may I offer a little advice on building such partnerships? First, we must understand how important Indo-British relations are to us. Take one example—a company which I brought to this country—Tata’s. Tata Group employs over 45,000 workers directly in Britain and supports a further 100,000 indirectly. The UK Tata Group spent over £700 million on R&D last year—this year it will probably be more than £1 billion. Yet a failure to see how we gain from these investments still affects British decisions. During the financial tsunami, loan insurance was requested by Tata but it was turned away, being an Indian company. People remember such slights.

Next, we must ask what we can offer our partner. Our science base, high-tech workforce, infrastructure and access to Europe complement our cultural strengths. I have escorted many Indian business leaders around factories in Britain and seen them become enthused by our technology and our workers. We have many hidden gems. But we make it difficult to invest in them by putting up needless barriers. Of course we need strong Immigration Rules, but we should show flexibility for those who have a lot to contribute.

India knows what this takes. In fast growing sectors of the Indian economy, like pharmaceuticals and biotech—today the biggest investment worldwide in India is in the pharmaceuticals and biotech industry—the world’s biggest companies are moving to India, bringing top people, even though India has many graduates. Indeed, 700,000 science and engineering students graduate each year in India. These numbers mean we must never think of India as just a home for low-cost outsourcing.

But quality counts more than quantity. In a knowledge-based economy, there is a global drive toward higher skills to meet shared challenges. India’s technologists are at the cutting edge of that charge. I came from an Indian university—the first Indian university of technology—and 95 per cent of my classmates went to America, because it was easy. When I go and see American companies and American universities, they are full of Indian students doing their masters and doctorates, and doing research. Leading US universities and technology businesses such as Google and Microsoft are being led by graduates of Indian universities like my alma mater, IIT Kharagpur.

We could seek to join these leaders in their current challenges and thus share in their future successes. In other words, we must welcome India here as well as sell Britain there. The coalition clearly wants to do business with India. It has made a strong start after about 12 years of neglect. I only hope it ensures that India wants to do business with us.

My Lords, I join other noble Lords in congratulating my noble friend Lord Parekh on having initiated this debate, along with Amartya Sen, who is one of the few intellectuals equally well known in India and in the UK, and of course across the rest of the world. He is one of our best ambassadors, linking the two countries, and I congratulate him on the breadth and importance of his work across the years.

I would like to make some remarks about the links between India and the UK, which could be developed around areas of climate change and sustainability, briefly touched upon by the noble Lord, Lord Ahmad.

For a long time the Indian leadership essentially saw climate change and sustainability as “not our problem”. As the noble Lord, Lord Ahmad, said, using slightly different statistics, with about 30 per cent of the population living in or close to absolute poverty, development was seen as a priority, and climate change was well down the agenda.

That attitude has now shifted very radically—and quite rightly. I had two conversations with Prime Minister Singh on these issues, separated by about five years, and his attitudes over that time had changed quite substantially. That was not as a result of what I said to him, I am sure—I am not claiming that. In general, India has assumed a leadership position globally on climate change and sustainability issues. It was one of the five nations that forged the Copenhagen accord, and has been very active over the past few years in climate change debates across the world.

It is now recognised by the Indian leadership how dangerous climate change is to India. About 70 per cent of the River Ganges, for example, comes from runoff water from glaciers. Those glaciers have melted dramatically over the past few years, and it is clear that in a country that already has a monsoon season—quite extreme weather—one of the consequences of climate change is much more extreme weather. These things are very dangerous for India, and are now fully acknowledged by the Government.

I therefore see several key areas of potential collaboration which could be of value to both countries, and I will mention three of these. First, the most obvious one, I suppose, is in the area of low carbon and sustainable technologies. India now has substantial investment, particularly in solar technology, but also has quite a large number of wind farms. So far, those two technologies combined make up for less than 1 per cent of the total energy mix in India. In India and the UK, a key issue in both those technologies is to bring down costs so that they are comparable to fossil fuel energy production. An enormous amount of valuable dialogue could be carried on about that. Even though the UK does not have much manufacturing capacity in these areas, it has a lot of technical know-how. Collaboration could be very important to both countries.

The second area is urban design. I think we know that in future we will have to construct our cities differently to follow the demands of sustainability. In an Indian city, for example, where there already is a fair degree of solidarity and connection between people, it does not make sense simply to build supermarkets around the edge of that city, thus creating an evacuated city centre and breaking down the connections which exist. I think that we are all looking for new models of urban development which have sustainable bases to them. Again, we in the UK have a lot of expertise in eco-technology, not just for dwellings but for city design. We have a number of famous architects who have worked extensively in India in some part on these issues. We should try to develop these ties in a much richer way.

Thirdly, we could have intellectual and political collaboration between the two countries. Both countries will need to think of alternative models of development. We know that in the UK growth will be limited over the next few years. That invites us to think what kind of model of growth we should have. India, we hope, will have much higher growth rates but there is no way in which India can recapitulate the western model of development beyond a certain point. It is too destructive, as we have seen in the case of the environmental destruction in Chinese development. India should seek to avoid that.

There could be a lot of collaboration, which is where jobs will be created. Jobs will not be created in just alternative technologies; they will be created through alternative lifestyles. We could have a sort of coffee-shop model of development. Who knew that the British, after years of drinking horrible coffee, really wanted to drink nice coffee and get together in coffee shops? Well, no one very much knew that but this created lots of new jobs. The same thing will be true of the lifestyle changes associated with increasing sustainability.

My Lords, the Government have set themselves a bold ambition to put the British relationship with India on a new and stronger footing. The Conservative manifesto at the last election called for a new special relationship. At the Prime Minister’s visit in July 2010 there was launched what was called an enhanced partnership. We are grateful to my noble friend Lord Parekh for enabling us to have this debate, which is an opportunity to assess progress on that bold ambition.

On these Benches, we are strong supporters of what the Government are trying to do. India has made remarkable progress in the past two decades. Its growth is spectacular even though inflation poses a problem to its sustainability. On the official measures, the numbers of people living in extreme poverty have fallen from 26 per cent of the Indian population to 16 per cent, which is a great achievement.

For reasons of sentiment and self-interest, and because people from India and south Asia make a crucial contribution to our society here—while recognising the point emphasised by my noble friend Lord Parekh that India has a different perspective on world events than often we have—we must try to strengthen the relationship. But we must not do that on the basis of false premises.

One false premise was that the previous Labour Government neglected India. One of the things of which I am proudest is that development aid to India under the previous Labour Government was three times the level in the past three years of what it had been in the 1994-97 period; that is, £825 million being spent from 2008-11. I know that there are question marks about whether we should continue to do this but we on these Benches will always remember that there are more poor people in India still than there are in the whole of sub-Saharan Africa.

A second false premise is that a choice is to be made between a bilateral relationship and a multilateral relationship. The truth is that the two have got to go together. The only point on which I would disagree in the excellent speech made by the noble Lord, Lord Bilimoria, is that it is the capacity of the European Union to mobilise hopefully an agreement on a Doha trade round but certainly to agree a bilateral free trade agreement with India. It is that capacity which will lead precisely to the kind of liberalisation in India that he is seeking. But on our own I do not think that we have that ability.

I agree with what the noble Lord, Lord Ahmad of Wimbledon, and many other speakers have said; namely, that the economic relationship has tremendous potential. But let us remember that it is starting from a very low base. Of our outward investment in Britain, it is regrettably the case that only 1 per cent of Britain’s foreign direct investment is located in India. More than 50 per cent is in the European Union. On looking at Indian exports, I found an extraordinary fact today: India exports more to the Benelux countries than to the United Kingdom. There has been no dramatic expansion of our trade in recent years. Indeed, I picked up an article that told me that in 2008, Britain was India’s eighth largest trading partner, exporting goods worth about $5 billion. By 2010, that figure had fallen to $4.4 billion. There is an awful lot of work to do to make this economic relationship work.

Our fear on these Benches is that the Government are putting crucial new obstacles in making this relationship a success. Last January, we were all greatly relieved when the right honourable Vince Cable, the Secretary of State for Business, Innovation and Skills, told us that the visa problems he thought that there would be in the business relationship with India were being solved. Only a month ago, I read in the Times that whereas four years ago it was possible for an Indian business person coming to Britain to get a visa within a few days, it now takes 15 days. People have been saying that it is a lot easier to go to France and other countries in Europe to do business because of these visa rules.

The Government set lots of other objectives for their partnership with India, including higher education, on which noble Lords have spoken. Last week, in the debate on universities, we heard how the number of applications from Asia to Russell group universities is falling fast. How can any nation so comprehensively shoot itself in the foot simply to fulfil a stupid, populist policy that was included in the Government’s manifesto in terms of immigration? I repeat: it is simply shooting our future prospects in the foot for the sake of rank populism.

The same applies to the future leaders’ network that the Government hope to set up. How can we have a network of future leaders if we prevent them from coming to this country? Let us have a constructive approach to this relationship and try to build it, and not put obstacles in its way.

My Lords, I thank the noble Lord, Lord Parekh, for initiating this debate. He said, among other things, in his opening remarks that “only when we seek active engagement with India” will we gain the right to criticise Indian policy. This Government is seeking active engagement with India. That is why the Prime Minister and a very large number of Ministers went out to India this time last year, and that is why we have a continuing programme of visits. We hope to have a bilateral summit very shortly, on a date which is yet to be agreed. It is a major and continuing project. So it is not a question of “only when”—we are attempting to do so.

There are some obstacles—perhaps on both sides. We have to engage with the Indians and we must recognise that in pursuing an enhanced partnership we have a great many competitors. Much has been said in intervening speeches about the decline in the number of Indian students coming to the United Kingdom. Indians have been going to the United States. The United States is the most popular foreign country within India and that is part of what we now have to compete with. As the noble Lord, Lord Giddens, and others know, this is in sharp contrast to the flow of Chinese students to Britain, which has continued to rise and is at a far higher level. It will take a good deal of time and effort to catch up to where we would like to be across a very broad number of spectrums. We have to attract the attention of the Indian elite and of the rising young Indian middle classes—the rising young Indian educated generation. We have to have a broad effort at trade and investment on both sides and further develop relations in the fields of climate change, defence and as an aid partnership.

Having such an excellent Indian diaspora here is a tremendous asset. As the flow of investment in both directions shows, this is already helping to develop closer links, in addition to the historical cultural relationship with India. We are all conscious that we have to build on this. The noble Lord, Lord Liddle, castigated the populist policies of the coalition Government on migration. As someone who does his politics in Yorkshire, I am very conscious that it is very often our settled ethnic communities who are themselves strongly supportive of tougher rules on immigration. This is not an easy subject. I often find myself talking to people whose parents or grandparents came from south Asia and who want to know when we are going to stop more people coming in. I have a vivid memory of the noble Lord, Lord Dholakia, and myself talking at the Hindu Cultural Centre in Bradford in the last election but one. The second question we had from the floor was: when are we going to stop more of these foreigners coming in? The noble Lord, Lord Liddle, understands that there are many difficulties in making a simple answer to the problems of immigration.

Noble Lords have already remarked that India is by now the third largest foreign investor in the UK. I believe the noble Lord, Lord Parekh, claimed that it is now the second largest. The UK is the fourth largest investor in India. We are attempting to encourage a rising flow in both directions. The enhanced partnership is, I stress, a partnership and it has to be a partnership of equals. We have to get rid of any sense that this is an ex-colonial relationship. As you will all know, the continued existence of the aid relationship with India has become a matter of some controversy in the right-wing press in Britain. It is our intention to move from an aid relationship concentrating on the four poorest states in India where—as the noble Lord, Lord Liddle, has remarked—there are still a great many extremely poor people, into a partnership with an Indian government which now has its own steadily increasing aid programme, so that we can share our experience in Africa and elsewhere with the Indians as they come in. That is a pattern which we see ourselves using across the board.

The noble Lord, Lord Giddens, has, to my great pleasure, mentioned that we already have a very useful partnership with Indian scientists and others in climate change and that has been invaluable in getting the global debate on climate change under way—not as the white countries telling others what to do, but as a shared concern about long-term environmental degradation.

The defence partnership is, at the moment, less developed than we would like it to be, although we find ourselves sharing the anti-piracy patrol with Indian ships off Somalia in the Indian Ocean. The Indians are now the largest single contributor to UN peacekeeping forces, so as a country which expects that its forces are most likely to be engaged in helping to reconstruct failed states—post-conflict reconstruction—we will very often find ourselves alongside forces from south Asia. We already have a number of officer exchanges on both sides, and again there are traditions on which to build. I was astonished and delighted to find myself at the National Defence College in Pune, sitting next to an Indian general who told me that his regiment was called Skinner’s Horse. I did not know they still had regiments like that in the Indian Army. We see ourselves moving towards future joint training, and I hope also to greater celebration of the past. That is because our young generation in this country, including the children of Asian immigrants, have forgotten that the largest single Commonwealth contingent in the Second World War came from the Asian sub-continent in the form of the Indian Army.

Many noble Lords have talked about the importance of universities and education. Already much effort is being made. The second tranche of the UK-India Education and Research Initiative is under way. Research Councils UK is working to improve collaboration at the highest levels, and I know that the noble Lord, Lord Parekh, knows what the British Academy is doing in this regard. I regret that student flows are not larger. My former university, the London School of Economics, has developed a number of joint degrees with Chinese universities, but it has been much more difficult to get into partnerships with Indian universities. We need to move further on this. We hope very much that the Indian Government will now complete the passage of the law which would allow foreign universities to set up campuses on the Indian sub-continent. It is a way of trying to increase the two-way flow, and I should mention that the Department for Education and others are hoping to encourage more British students to study at Indian universities. After all, India has some top quality universities. I can speak with some feeling on this since some years ago my son led the British “University Challenge” team that played the winner of the Indian equivalent and was soundly beaten in Delhi.

On visas, I have already mentioned that the situation is extremely complex and we are faced with a British population which has a range of contradictory pressures. However, we are aware of Indian concerns and are doing our best to meet them. On economic relations, many noble Lords have remarked that there is a great deal of good news on the way, but we need the Indians to open their market for services. The United Kingdom is above all a service exporter. Insurance, banking, legal expertise and accountancy are areas where we have the strength to compete much more effectively in the Indian market. We see the EU-India free trade area, which is still under negotiation and we hope will be completed in the next few months, as a major step forward.

I should like to end where I began by saying that the strength of the UK-Indian relationship lies in our historical ties and in the personal ties which the largest diaspora community in this country provides. It is economically successful in this country and the loyal links that people still have with India help to build economic ties in everything from the brewing industry to the pharmaceutical industry. We look to that as one of the many strengths we can pursue further in building a stronger relationship. Again, I thank the noble Lord, Lord Parekh, for allowing us to return to this subject, and I hope that we will consider it again soon.