The Telegraph
Since 1st March, 1999
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UK firms have missed India boat

London, June 21: One of the most important reports on the Indian economy is being published tomorrow in London by the House of Commons select committee on trade and industry which says that “the UK’s perception of India has been seriously distorted by the media’s focus on the perceived threat to UK jobs from outsourcing, particularly from call centres”.

This has created a view “that these centres are the dominant feature of the Indian economy”, according to the report, which paints a very positive though not uncritical picture of the Indian economy.

It says: “UK commentators and analysts need to understand that the complete range of BPO activity includes everything from software development to accountancy services and medical secretary services to typesetting.”

The select committee, headed by a pro-Indian Tory, Peter Luff, includes MPs of all parties who visited India to conduct one of the most searching examinations of the Indian economy.

Their view seems to be that the old India of the Raj has vanished, giving birth to a new and much more confident country.

They lament that given Britain’s long and historical links with India, UK companies have rather missed out on taking a much bigger stake in the rapidly expanding Indian economy.

Though many British companies have missed the boat, especially in the Telecom sector, says the report, all hope is not lost. The MPs suggest ways in which Britain could do better.

The report is probably the most thorough that has been published by a foreign parliament in the last 10 years. It will probably tell even Indians things they do not know about their own country.

“How the UK reacts to globalisation is one of the most important issues facing the UK government,” the report begins.

“To know how to react, it is necessary first to understand the real nature of the challenge. The decision to undertake an inquiry into India was born of an often-expressed concern that the UK is making less of its opportunities than our global competitors.”

It says: “Representatives of both the Indian government and the UK and Indian private sectors expressed their concerns that our unique relationship with India should be generating a much higher level of trade and investment than was actually the case.”

It points out that “India’s economy is the fourth largest in the world with the second largest population, of a billion”.

The MPs say: “Our report found, however, that the UK’s understanding of what is happening in India is still only partial. We saw in India that the true scale of business process outsourcing (BPO) goes far beyond call centres. We also saw the growth of manufacturing industry of considerable quality in the automotive and aerospace sectors and the vast opportunities for the UK’s higher education sector.”

The report expresses regret that “the UK is not as engaged with India’s markets as it should be. Despite our long history of commerce with India, UK companies are falling behind their major competitors, perhaps because UK companies tend to see India as a source of low-cost labour rather than an emerging market in its own right.

“The UK needs to be far more entrepreneurial in its approach to India if it is to take advantage of the huge opportunities this vast country has to offer our companies and institutions.”

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