The eighth meeting of the UK-India Round Table was held at the Devonshire Arms Hotel, Bolton Abbey, Yorkshire on 6 and 7 February 2005. In the chair were Lord Swraj Paul, the UK Co-Chairman and Mr Hamid Ansari, the Indian Co-Chairman.

Lord Paul warmly welcomed Mr Ansari as the new Indian Co-Chairman. He also requested that his expression of gratitude to the former Indian Co-Chairman, Mr K C Pant for his skilful and patient chairmanship, be placed on the record. Lord Paul announced that this would be his own last meeting as UK Co-Chairman of the Round Table. He said that it had been an honour and privilege for him to have co-chaired the Round Table for the last five years and thanked Round Table members for their valuable contributions and support.

The main themes of the meeting were drawn from the Joint Declaration of 20 September 2004 and the exercise known as the Prime Ministers' Initiative, namely the Movement of Peoples, Education, Trade & Investment and Public Diplomacy.

All participants concluded that this had been an excellent meeting, with dynamic, open and constructive discussion, resulting in a strong push for meaningful action in a wide variety of areas. There was agreement that the Round Table should play a more active role between meetings to assist in the implementation of its recommendations.

The list of participants is at Annex 1. This report is to be submitted to the respective Foreign Ministers by the Co-Chairmen.

Public Diplomacy and the Bilateral Relationship

In their introductory remarks the two Co-Chairmen pointed to the excellent state of the bilateral relationship, spearheaded by the two Prime Ministers. A strategic partnership has been established, as reflected in the commitments contained in the Joint Declaration of September 2004. Further progress was already being made in various areas, notably the Joint Economic and Trade Committee (JETCO), which had held a constructive first meeting. Another vital area of progress was air services; the Round Table had pressed hard for an increase on many occasions. The recent breakthrough would have a positive effect in all the areas under discussion. One field of particular concern was education, an area of fundamental importance to future ties.

A recurring theme was the fact that India was now beginning to realise its true potential. There was no turning back. Progress had hitherto been incremental but India was on the verge of a quantum leap in many fields. Recent long term forecasts of economic growth suggest that India would be a major economic power before the middle of the century. India was not merely a source of inexpensive labour. It would also be wrong to categorise her as a provider of services while China remained the manufacturing powerhouse of the world. India's manufacturing was reaching a high standard in several sectors. The establishment of R&D centres in India by leading multinationals reflected the high calibre of its graduates. India was enthusiastic about cooperation in trade and investment and science and technology.

Both governments recognised their mutual interest in working together on global governance. Contacts were taking place across a wide field.

Nevertheless, despite all this and while all the architecture was in place for stronger bilateral ties, mutual perceptions in the two countries were not keeping pace with the efforts of governments. One description of India's relationship with Britain was that it was 'a fully laden ship waiting for the wind to blow'. Far more needed to be done, in particular, to get across the message of change in both countries.

The UK decision to mount a major public diplomacy campaign was very welcome, but efforts on both sides to open up communication and the means to greater mutual awareness must be unstinting. Younger Indians were not looking to the UK for inspiration; they had their eyes on the United States. Respect for age for its own sake was eroding in India; the future lay with its vast well-educated youth. Younger people would have a greater say in the future of India than hitherto.

In this discussion, as in those on the other themes, great emphasis was placed on the vital need for Britain to connect with the younger generation of India. They must be made aware of the fact that the UK had transformed itself in recent years. Its economy was already considerably larger than those of France and Italy. People in the UK, too, must be made aware of these changes. The Government of India, as well as the corporate sector in both countries, also had an important role to play in facilitating mutual awareness of advances and changes..

Improvement in all forms of communication between the two countries must be a priority for Governments. They could start by giving strong encouragement to the promotion of middle level tourism given the recent agreement on increased flights. The low capacity in air travel hitherto had been a serious drag. The planned increase was a start but there was scope for many more flights between the two countries.

If the UK really felt that its interest lay in a close partnership with India, then it should take radical steps to achieve this. A study should be made of where the relationship might stand in 20 years. The Round Table should use such a study to identify the means to accelerate progress towards closer cooperation. Perhaps, the greatest opportunity lay in the field of education given the view that the real basis for a strong future relationship lay with the younger generation (see below: Education).

Recommendations

1. That the Round Table should commission a study of what the relationship might be in 20 years time, taking into account such factors as forecast economic growth, globalisation, evolving attitudes to the movement of peoples and technological progress. The study should be presented to the next meeting of the Round Table. The Round Table should then regularly look back from the study, and make recommendations on areas where progress towards certain goals might be accelerated.

2. That the report and recommendations of the meetings of the Round Table be circulated to opinion formers in each country and posted on High Commission websites.

(See also related recommendations in the other sections of this report)

The Movement of Peoples

Members noted that globalisation had created a situation in which the lowering of barriers to the supply of goods and services had outstripped progress of the freer movement of peoples. Many countries continued to restrict movement by means of immigration laws and visa and other forms of immigration control, sometimes for wholly justifiable reasons, for example, security. But some others did so for political reasons. It was hoped that policy on immigration in the UK would continue to be based on analysis of broader requirements and not political pressures. The free movement of peoples was crucial to a closer relationship.

National policies on immigration must take into account security and employment but they must also make clear distinctions between different categories of immigrants. The movement of workers and professionals was a phenomenon of modern economic growth. Demographic changes in advanced countries, for example, in the EU, made the cross-border flow of labour an absolute necessity. It would remain so increasingly in the future. But governments must be relentless in stamping out the ill treatment of guestworkers and illegal immigrants, in particular, the nasty crime of people trafficking.

It was noted that the UK Government had publicly recognized that the benefits of the freedom of movement of workers and outsourcing, which were a factor of globalisation although, perhaps, inevitably, abuses of the system had led to a tightening of certain regulations. The Indian side expressed concern at the Voluntary Vetting Scheme which was detrimental to academic exchanges in high technology areas, identified as one of the important areas of cooperation in the Prime Ministers' Initiative. Controls were necessary but not barriers. It was accepted that there had been improvements but there was still a lack of transparency, notably in the operation of quotas in the UK.

The Round Table was deeply concerned by the growth in illegal immigration since this often involved grave abuses of human rights and outright criminal behaviour. Everything should be done to stamp out trafficking in people with especial efforts made to catch and punish the intermediaries responsible.

Serious attempts should be made to assess the labour market requirements in both countries and regulations should permit the free flow of workers in strong demand, especially professionals. Educational institutions in India were concentrating on qualifications which met international standards, a further argument in favour of lowering barriers to cross-border movement of skilled workers and graduates. The UK had loosened its regulations on foreign students working both during and after their studies but a perceived lack of transparency still caused problems for them.

Recommendations

1. That the Governments should work together to eradicate illegal immigration into the UK, in particular, targeting those responsible for trafficking in people.

2. That an analysis should be made of the future labour market requirements of the UK with a view to the establishment of India as a preferred source of skilled labour, taking account of India's own employment and skills needs.

3. That every effort should be made to facilitate travel between the two countries, in particular for students, businessmen, research scholars and professionals, for example, through further improvements in the processing of visas and the issue of work permits.

Trade and Investment

Indian members emphasized the huge benefit of the incremental economic reforms since 1991. Economic reform would continue; witness the recent lifting of caps on Foreign Direct Investment (FDI) in civil aviation and telecommunications. Political factors might, occasionally, slow the pace of reform but they would not prevent it.

The focus of the economic reform programme had now shifted:

a) to the rural, agriculture and food sectors. The aim was to bring 300-500 million more people into the mainstream of the Indian economy.

b) to the development of improved infrastructure. There was, of course, close interface between a) and b).

c) to the SME sector

In addition to the above, huge efforts were being made in the fields of air services (investment by airlines, in airports) and urban infrastructure (using corporate townships as models). The banking sector was in good shape, with NPLs at a low level by international standards.

There was exponential growth in the service sector. One trend was that well-educated young people were not following traditional career patterns and increasingly working on their own account or setting up small companies. British SMEs should be encouraged to network with them. There would be explosive growth in healthcare, education and training. A scheme, based on the UK City & Guilds system, to provide one million Indians with skills, was being put in place.

India was 'going global' in a big way. The mindset of Indians was changing radically. Growth of trade with China had been exponential. A free trade agreement between the two countries was under discussion. The relationship with the USA was being transformed across a broad front.

There were black spots, for example, transport infrastructure and power generation. Much of the latter was the responsibility of the States where it was a political rather than economic problem. But they were being addressed. The high fiscal deficit of the states was another matter of serious concern. Another major task for the Government was to balance the pace of economic growth with the distribution of economic prosperity. The eradication of poverty was of vital concern. There were more poor people in India now than there had been people in India at Independence.

A strong pitch was made for the UK to look at cooperation in the healthcare sector. The modern Indian healthcare sector was mainly in private hands. Large firms were now investing heavily. Serious efforts were being made to increase the supply of well trained medical personnel. Attitudes towards healthcare provision were changing in both countries. It was noted that the UK NHS had already been looking at the Indian market. Reliance on remote diagnostics could reduce costs substantially. The economics of patient movement might make treatment in India a real attraction. There was substantial potential benefit for Britain from the growth of this sector in India: investment by UK healthcare providers, technical and regulatory support and the supply of hospitals, equipment and even insurance.

Recommendations

1. Noting the importance of much closer contact between younger people for the future growth of business links between the two countries, that the Indo-British Partnership and other relevant UK bodies pursue efforts to increase contacts between SMEs in both countries and also to connect the platform of Young Indians in India with their counterparts in the UK.

2. That leaders of Indian companies investing in the UK and British companies investing in India should be enlisted widely to publicise the overall attractions of investment in each other's country, notably, at the annual investment conference proposed by JETCO, in order to change negative perceptions in the UK about investment in India.

3. Noting the extensive benefits of increased travel in both directions for closer links between people in many walks of life, that the two governments strive to achieve further increases in air services, in particular, with the aim of boosting middle level tourism.

4. That British and Indian firms pay especial attention to the opportunities thrown up by reforms in India in services, manufacturing and infrastructure, most particularly in the food and agriculture sectors, which offer considerable scope for partnership.

5. That an early study be commissioned on the scope for greater cooperation in healthcare.

6. Noting a new trend for networking and cooperation between professional associations in the two countries, that a survey should be made of existing contacts and strong encouragement given to the promotion of further contacts.

Education

The meeting warmly welcomed the comprehensive study funded by the British Council entitled The India-UK Strategic Partnership: A Review of Academic and Educational Links, which they praised for its thorough analysis and useful conclusions. (The Executive Summary is attached to this report).

Both British and Indian members expressed deep concern at the erosion of educational exchanges between the two countries. India's exchanges with other countries had been on the increase - supported by much more generous government funding. Whereas many current leading Indian academics and leaders in other sectors had benefited from a British university education, in twenty years time there would be very few. That would have grave implications for the bilateral relationship. It was also noted that while numbers of Indian students in the UK had risen substantially, mainly on vocational courses, it was feared that they were not of the highest calibre. Indian students were discouraged by the discontinuation of scholarships.

The Round Table strongly endorsed the findings of the British Council review which recommended funding for faculty exchanges and graduate and post-doctoral fellowships in both directions, in addition to action to attract more students of the highest quality to the UK. However, notwithstanding the value of this study, the meeting was strongly of the view that a more radical approach was needed with much bolder funding proposals. Recalling that a really radical initiative had earlier been suggested as necessary to achieve a step change in the bilateral relationship (see above), members were convinced that education was the area in which this could be undertaken. Such an initiative would meet the finding of members that far greater interchange between younger people was essential to change the erroneous mutual perceptions that persisted. Its benefits would transform the relationship over many years and would impact on every sector of the relationship, not least trade in goods and services and investment.

Recommendation

Bearing in mind that the imbalances in the relationship are at present very much in the UK's favour and that the Government of India have endowed at a cost of nearly �2 million a chair in Indian Studies at Oxford, that the UK government should make a strong commitment to addressing this weakness in the relationship, with bold initiatives and funding of at least �5 million per year rising over a period of 5 years to �10 million per year, to implement the recommendations of the British Council review and to attract more students of the highest quality to the UK.

Annex 1

• A High level Academic Exchange programme building up to 50 PhD and postdoctoral exchanges annually in five years at a cost of �2 million�
• Setting up an India-UK Academic and Educational Network to deliver specific programmes on teaching and learning innovation, entrepreneurship development, academic study and research support, and policy forums in education�
• A website dedicated to improving information exchange, guidance on partnering, funding sources, and to support the work of the Network�
• More focused joint work on improving the environment for educational joint ventures�
• Expansion of school links between India and the UK.