Below is the text of Mr Major’s speech to the Businessmen’s Dinner in Bombay (now Mumbai) on Wednesday 27th January 1993.
It is a pleasure to be with you today. This is my first visit to India though coming here has long been an ambition. Already it has made a deep impression on me and whetted my appetite to see more. I am sure this will not be my last visit to this great country.
The first theme of my visit has been dialogue and partnership. I wanted to experience – to develop at the highest level – the increasingly close bilateral dialogue between our two countries. This of course owes much to ancient ties of history, culture, parliamentary democracy and personal contacts. But the changes in the world after the end of the cold war have made possible a new kind of partnership between India and Britain.
To be truly worthwhile a partnership needs to reflect the interests and realities of today in the new international environment. Old history is valuable. But so is current reality. My discussions in New Delhi this week certainly met both those tests. I look forward to continuing and developing the dialogue.
My visit was given symbolic meaning by the invitation of the Indian Government for me to be chief guest on Republic Day. The parade was a memorable spectacle. Standing there with the President and the Prime Minister of India I felt that the shadows that the past has sometimes cast over our relationship had been dispelled by a modern partnership between sovereign democracies.
Another theme of my visit has been confidence – British confidence in India. In our country, as in yours, there is a deeply entrenched commitment to the principles of democracy, tolerance and the rule of law. India’s problems can be solved only by Indians: but, as you work them out, you can be sure of our close interest, sympathetic concern and confidence in India’s secular democracy.
By the same token, the world has watched with dismay the disturbances and destruction that afflicted this great city earlier this month. I hope and pray that peace and harmony, now restored, can be maintained. You do not need me to tell you of the responsibility which rests with the leaders of the business community in helping to resist the forces of hatred and disruption and healing the social and economic wounds. I bring you today the hope and confidence of the British Government that Bombay, which has met so many challenges in the past, can meet this challenge also.
And may I say a word about Maharashtra’s governor, Dr. Alexander. India has a tradition of sending her best to be High Commissioner in London. And we return the compliment. We have warm memories in Britain of Dr. Alexander’s time as High Commissioner. He has many friends and admirers and all of these friends wish him well in his new post.
For your city has a special place in British hearts. The connection goes back to 1661 and has developed over the years as the city has become the vibrant heart of India’s economic and commercial life.
London and Bombay are the financial capitals of our two countries. The effective provision of financial services is vital, not only for the health of the domestic economy but also as a source of foreign earnings. We are proud of the achievements of the City of London, and we depend on them to help earn our keep in the world. Bombay too has the potential to be a world commercial and financial centre.
One of the main themes of my visit is the partnership which Britain and India can enjoy in the wider world economy. This is what I want to focus on tonight.
World Economic Prospects
The international economy is living through hard times. It is precisely at such times that the temptations of economic isolationism grow, together with the pressures on governments to give special help to their own industries and their own companies. It is precisely at such times that governments must be strongest in resisting these siren calls. For those policies would lead us into a downward spiral of beggar-my-neighbour. We can be sure they would do no one any lasting good and would damage most those who are already most vulnerable.
We need international co-operation – regionally and globally – to bring back growth to the world economy. The most important key to that recovery remains success in the Uruguay Round.
An early and comprehensive settlement of these GATT negotiations is crucial for the future health of the international economy. According to OECD estimates it would mean a boost to the world economy of some 200 billion dollars per annum. That in turn means new income and new jobs for millions of people all over the world. It would be folly to put all that at risk.
I sometimes hear that GATT is arranged to suit the developed countries. It is of course true that we have much at stake. But developing countries need free trade just as much, if not more. Their companies need the opportunity to sell those goods and products where they are competitive, and to buy the inputs they need at prices they can afford. The progressive liberalisation of trade in textiles and agricultural products promises enormous benefits for developing countries, including India. Protectionist barriers damage most those who think they are being protected. The developing countries which have opened their markets most have prospered most. The evidence is there for all to see, not least in Asia. Trade and investment are far more important than aid in promoting sustained economic growth in developing countries.
So a GATT agreement will be good for India too. Like the rest of us, the Indian Government have seen that the whole settlement is greater than the sum of its parts.
Britain is not of course an independent actor in the GATT talks. The European Commission negotiates on behalf of the 12 members of the European Community. The EC is India’s largest trading partner, and an essential source of investment and development assistance. Britain has just completed its Presidency of the Community. At the Edinburgh Summit last month, we sorted out many of the Community’s own problems.
The progress of the Community has been further underlined by the opening for business of the European Single Market on the first of this month. It is the biggest market in history. Barriers to trade and enterprise have been broken down. Europeans can now live where they like in the Community and buy goods and services freely in the country of their choice.
The Community remains open to trade from all parts of the world, and should be increasingly open when Uruguay Round provisions come into force. No new barriers to trade arise from the Single Market. We want to destroy the barriers to trade, not just move them. And the increasing harmonization of standards in the EC makes life easier, not harder, for outside exporters. They have only one target to aim at, rather than 12.
Last month, under the British Presidency, India and the EC initialled a new Co-operation Agreement. Proof of Britain’s determination to keep the Community open and outward-looking. The new text opens the way for increased co-operation in areas as diverse as trade, investment, development, the environment, agriculture, science and technology, energy, telecommunications and drug abuse.
We hope that when the Agreement is signed, it will be accompanied by a Joint Statement on political dialogue. This second document – also negotiated under our presidency – enshrines arrangements for the Indian and EC governments to work together closely on a wide range of political and other issues.
We are your natural partners and friends within the Community and are delighted to continue to make this count in practical ways.
To sum up, my message on Europe is threefold:
– the Community is moving forward with full British commitment;
– the Single Market is emphatically not a barrier to Indian exports;
– the relationship between the Community and India is set to develop further, with Britain as one of India’s friends at court.
The British Economy
It is against the background of these world and EC developments that we have to deal with the more immediate economic concerns of our two countries. A few words about the British economy first.
1992 cannot be claimed as one of our vintage years. Signs of economic recovery were slow to appear. Unemployment continued to rise. Company and individual confidence remained stubbornly low.
But behind the scenes I believe the stage is set for a decisive move towards our consistent economic objective: sustainable non-inflationary growth. The necessary underlying conditions for this are now in place:
– inflation – at 2.6 per cent – is at its lowest for six and a half years;
– interest rates – following yesterday’s reduction – are now 6 per cent, the lowest figure for 15 years and the lowest in the European Community;
– confidence is beginning to return to house-buyers, consumers and investors; and
– our exchange rate is highly competitive.
All this provides a tremendous opportunity for British industry. The government will be working closely with industry, especially manufacturing companies, to maximise investment in modern equipment and increase exports. We shall also be redoubling our efforts to free up our own markets, and reduce the burdens of government and bureaucracy on our own companies. The cornerstone of our policies remains the conviction that the creation of wealth is most effective when economic and commercial freedom are greatest.
Indo-British Economic Links
India and Britain are two of the largest dozen economies in the world. British investment in India is estimated at about 2 billion pounds, significantly larger than that of any other country. At least 250 British companies are well established here with an important stake in India’s economy. Many more have tie-ups involving the transfer of technology and know- how. The open British market will provide ample opportunities for India’s increasingly competitive exporters, many of them from Bombay and Western India.
British development assistance to India is almost twice as much as to any other country in the world. We are proud of our aid programme here, which combines support for projects aimed at encouraging economic growth with help for the poorest. I was able to see something of our aid programme earlier today when I visited two slum improvement projects in Indore. The project is transforming life for the people, enhancing their environment, their health, their education, their opportunities to earn a living, and above all their dignity. We are proud of our partnership with the Indian authorities in making all this possible.
So we are already doing much together. But this is only a beginning. New perspectives are opened by the dramatic change in India’s economic management and policies in the last eighteen months. Prime Minister Narasimha Rao and his Government have made Herculean efforts to stabilise the economy after the crisis of mid-1991. And having achieved this stabilisation, they are set to change the policies which, however justified at the outset, would never have built prosperity.
We have admired and applauded the sweeping away of so many of the bureaucratic obstacles – the so-called licence raj – to normal business decision-making. We have welcomed the attack on high trade tariffs and even more direct barriers to trade, and the shift to genuine encouragement of foreign investment. We believe the policies of reducing wasteful and irrelevant government subsidies, cutting the budget deficit, and redirecting government spending to where it is most needed – the basic needs of the poorest, particularly in education and health – are absolutely right.
We all know the entrepreneurial talents of the Indian people. We in Britain know them particularly well from the immense and valued contribution to our economic and commercial life made by so many entrepreneurs, large and small, of Indian origin. These talents can now be fully liberated in India too. India can look forward to taking its place before long among the fastest growing economies of Asia.
The land of the tiger can become an economic tiger herself. She starts with great advantages: a huge domestic market, a reserve of trained and inexpensive manpower, a thriving private sector with an established entrepreneurial tradition and great natural talent, most of the necessary financial institutions already in place, and an exuberant democracy.
But – there is always a but – the fruits of reform will only arrive if reform is continued and deepened. The effort to liberalise the economy and expose it to international competition must not only be maintained, but increased. The UK government has supported the process wholeheartedly through extra balance of payments support, through the positions we have taken in the international financial institutions, through the encouragement we have given to our companies to look at investing in India.
What goes for Britain, goes for India – free markets and competition increase prosperity for everyone. Opening up trade, including in consumer goods. Liberalising further industrial and agricultural markets. Confining the public sector to its proper role and make public sector enterprises free to act and accountable for their actions. Making your labour laws encourage job creation and investment, rather than giving an illusion of job security to a privileged few. The Indian people will be the winners.
I said that we have been encouraging our companies to take a fresh look at India. It is significant that I have been accompanied on this visit by one of the most senior British industrial delegations ever to be in one place overseas at one time. These are senior businessmen, seriously interested in what they can do in and with India.
Most of them have come with me to Bombay and are here this evening. They will tell you of the welcome message they received from Ministers and senior civil servants of the Indian government’s determination to maintain the reform programme. They are already making plans to carry this message back to their fellow British businessmen at home. They have agreed with their Indian counterparts on an Indo-British Partnership Initiative to promote trade and investment in both directions. As long as the reform programme continues – and the Government will need the continuing support of industry in carrying through difficult political decisions – I have no doubt that existing British investments in India will expand, and other British firms will set up here.
During my visit we have taken some big steps forward. Here in Bombay, British Gas and the Gas Authority of India agreed this week to collaborate in bringing natural gas on-shore first to industry, and then to private consumers – a deal worth £100 million. And today I was delighted to hear that the Indian authorities intend to award to GEC Alsthom a contract to link the electricity networks of the West and South of India, this time worth £140 million. These and other deals which I know are in the pipeline will bring employment and new technology to India, not least to Bombay, and jobs and continuing export business to Britain. It is a partnership from which we both stand to benefit enormously.
At my meeting with Indian business leaders yesterday, the first question I was asked was about the scope for privatisation in India and how Britain could help. I am sure that there is great scope for making more use of private sector skills in many parts of the Indian economy. I believe that this is one of the areas that the Indo-British Partnership Initiative should focus on. Britain has enormous experience of privatisation – we have carried out the most far-reaching privatisation programme in the world. Our experts – banks, accountants, consultants, civil servants – stand ready to advise and help as and when you in India decide to go down the same path.
I know there has been disappointment in India at the apparently slow pace at which foreign investment has been increasing. But investment depends not only on the right policies and general goodwill. It depends on policy implementation at all levels, on confidence that reform is here to stay on the certainty that the era of suspicion of foreign companies is over. The stability and clarity of policy objectives over time is what counts in persuading foreign investors to take decisions.
If that vision is there, Britain and India have so much to offer each other. I have already spoken in Delhi of the enormous general improvement in our bilateral relations. Much of the practical benefit for both of us from these excellent links will derive from the breadth and depth of our joint economic and commercial activities.
Governments cannot of course make this happen. The theme of my speech has been that at global, regional and national level it is competition and free markets which bring prosperity. The whole point of free markets is that individual companies and people decide for themselves where to invest and with whom to do business. But governments must create the right environment for free markets to flourish. We are on the right course. Let us both stick to it, build on what has been achieved so far, and together help to create a better future for all our people.