I think I said when I last visited that I would be a not infrequent visitor to India and I am delighted to be back here on this, my second visit to India, as the UK’s Special Representative for International Trade and Investment.

I have had the chance to discuss with a few people, since I arrived, the changes that have taken place since I last visited and I can only too easily see that a great deal has taken place in moving the economy forward.

Economic growth in India for the year ended March 2007 touched 9.6%, the highest in 18 years; it h as averaged 8.7% for the last 4 years.

I am delighted that India sees London’s financial hub as the place to go for listing and international liquidity.  The number of Indian companies on the London Stock Exchange has risen to 24, with 21 being listed on AIM .

Trade between our two countries last time I was here was £7.92bn.
In 2007 the figure was £8.74bn; an increase of 10%.

And the Indo-British Partnership has been strengthened by the creation last year of the UK India Business Council, whose aim is to enhance the entrepreneurial exchanges that take place between our two countries, and to identify ways of making our relationship deeper, stronger and more dynamic.

 “India is a young nation”; as a recent CII report said. India is indeed a young country in the sense that it is a furnace of energy, enthusiasm and youthful confidence, which are all leading to new ideas, innovation, creativity and new business models.

The government of this great nation can only hope to help steer its businesses and economy as since lighting this furnace only relatively recently it already demonstrates that it is a business environment that entrepreneurs find particularly favourable.  Now that the conditions are in place for this furnace to operate, one of the features of this new dynamic will be that business start-ups will need to find new ways of accessing capital to grow their businesses.  So one source of capital, venture capital, will be a key source of funds, and the Business Angels Venture Capital Network launched by our Prime Minister during his visit to Delhi just two months ago, in January, should I believe help to facilitate greater exchanges between the next generation of financiers and entrepreneurs both in the UK and India.

The next generation of young entrepreneurs will prosper most in an environment in which innovation is stimulated by an open, well-regulated market in which competition from both domestic and foreign companies will generate market efficiencies and improved quality – and don’t forget this openness will create greater opportunity for the Indian people and the main benefit will be for the Indian people across the country.

In addition, to attract mobile capital there is no alternative to creating an investment environment which encourages engagement with outside sources of knowledge and intellectual capital.  The UK experience has been to recognise globalisation as a great opportunity. This forward-looking view has made us the destination of choice in Europe for overseas firms seeking either to invest in Europe or more particularly looking for financial services in their broadest term.

In contrast to this position, however, in India this is currently one of the areas being closely protected both by the Indian Government and the key Indian professions of the law, accountancy and banking.

So, I would urge that you continue to assist in the further development of your economy, by recognising the real opportunities for foreign intellectual engagement with all branches of the financial services tree but specifically lawyers, accountants and bankers in these highly specialised fields of corporate finance and venture capital – as an opportunity to build growth as partners, rather than as a threat.

As a result of this UK attitude, we are now the world’s global hub for financial, legal and accountancy services. Our expertise in these areas could, in partnership with India, undoubtedly help to propel India to greater levels of inclusive and sustainable growth, and enable Mumbai itself to achieve its goal of becoming a Global financial services centre.

Foreign investors are also attracted to the UK by legislation that ensures that there is transparency in business, a competitive environment, protection of intellectual property rights and robust financial markets. We have a regulatory system which is rigorous, transparent and with a light touch – being principles based rather than regulatory rules based – which helps to drive this climate of innovation.  It has withstood the knock of Northern Rock and is currently being revised to modernise its capability in the light of global practices and provide further strength.

It has taken the UK a considerable amount of time to get to this position and a great many things have to be brought into alignment.  However long this takes to evolve; and it cannot be done overnight; India needs to continue the process in order to realise the benefits in the longer term.

The markedly changed attitude in the UK over the last two decades has seen some well loved traditions go by the board; you will not see that symbol of the old, the bowler hat, anywhere in the City of London these days.  We have had to move with the times and take steps to ensure that our place as the world’s leading financial services centre is continued by deliberately becoming less of an “old boys club”, which the City of London once was, and more of an open and international market place, with a huge range of different nationalities and working practices around the City, creating innovation and allowing brilliant people the opportunity to work with other brilliant people in an environment that is conducive to modern working practices. 

Reforms during the 1980s, in order to liberalise and open our markets, have resulted in internationalisation and modernisation; these reforms have strengthened our economy and enabled us to compete in the global marketplace, in a way that was not dreamed of in the 1970s and early 80s.  In particular, our experience with “Big Bang” in 1987 (when the London Stock Exchange opened its doors to competition from overseas banks and brokers) has brought about huge (and largely unanticipated) benefits, despite the understandable initial fears and resistance in the markets at that time.

This revolution has enervated the UK to be both the leading global financial services centre and the single most internationally-focused financial marketplace in the world.  I would also argue that this has not entirely been by accident, but the result of the application of  laws, employment practices, a tax and legal regime that supports overseas talent working in the UK, and a flexible, “will do” approach to business, adapting to meet customers real needs, as well as thinking outside the box to create new opportunities.  It does, however, remain to be seen how the levy on Non-Domiciles will affect the picture.  I hope the Budget, when it is delivered by the Chancellor today, will reflect the views of many people familiar with the consequences.

Today our financial services contribute more than 10% to overall GDP and $35 billion a year to Britain’s balance of payments and employ some 322,000 people in the UK.

The UK is the world’s largest source of international bank lending, with total banking assets of $10 trillion at the end of 2006, and 20 per cent of cross-border lending – the world’s biggest share.

The UK insurance industry is the largest in Europe and the third largest in the world. Net premium income is $310 billion.

The City of London is the world’s leading centre for international finance and business service, and has been for several years. Banks, brokers, securities firms and insurers from around the world provide a massive pool of financial liquidity and human expertise.  I am delighted that the Lord Mayor will be visiting in April to reinforce this message.

London is a centre for innovation – new financial products, new ways of protecting business against risk, and new technology to make business more cost-effective and able to react to a fast-changing world.

London has:

• offices, branches or headquarters of almost every major international bank and financial institution in the world;

• the world’s most important marketplace for over-the-counter derivatives with over 40 per cent of global trades;

• a 42 per cent share of global foreign equity trading;

• the World’s largest foreign exchange market: With a daily turnover of 31% of the global market – more than New York and Tokyo combined

• and three out of the four leading law firms in the world, and over 200 foreign law firms.

An unrivalled concentration of capital and capabilities means that more overseas financial institutions and investors choose to do business in, and with, the UK than with any other country.

The UK’s breadth of international financial dealing is quite remarkable. Straddling the world’s time zones between Asia and America, it is unique as a centre where international issues and international markets dominate.

The UK intends to remain an international centre for trade and financial services and shares India’s ambition to become an international centre for trade and financial services.  We should, nay must, work together to make this happen – very much in partnership.

The UK is already active in India, our leading banks, insurers, accountancy firms and venture capitalists are here – but not in such force that can help India to realise its potential.  They are looking to Mumbai to become the world’s next success story in international financial services. Our history and our shared values should act as a catalyst in this endeavour.

As a financial audience you will know that the dynamism of our financial services is second to none and the best in the World in so many areas.  We want to partner India in the exciting task of building your economy and for once be correct in suggesting you as a real tiger economy for the 21st Century.  

Please make use of our skills and expertise to build your India.  Our links are close and we would be delighted to assist our long-standing and valued friend with whom we have had a shared history over a number of centuries, and from whom we can learn so much in this exciting journey.
 
I wish you every success for the future.