Britain's Vision of the South Asia Dynamic
J. Sean Curtin (Fellow, GLOCOM)
The following is an edited version of a speech given by the British Foreign
Minister, Jack Straw, in which he sets out the United Kingdom's vision for
deepening its already strong ties with South Asia. For Japan, South Asia,
especially India, is also a region where economic ties are becoming
This speech was delivered on 19 May 2004 at a Commonwealth Business Council
event called "South Asian Dynamic" which was held at the Reform Club in
The Right Honourable Jack Straw, Secretary of State for Foreign and
As you all know, the largest democratic process in the world, in the shape
of the Indian elections, drew to a close last week. No-one can fail to be
impressed by the power of a democracy where over 380 million people can
bring about a peaceful transfer of power through the ballot box. India's
pluralist democracy is a role model for her neighbours and partners in South
And all of us in the British Government wish the incoming Indian United
Progressive Alliance Government which now looks likely to be led by the
architect of India's economic reforms, Manmohan Singh every success in the
I certainly don't underestimate those challenges, both for India and for
governments and people across the region. It is vital, not least, that the
leaders of India and Pakistan continue to show vision and courage to keep
the Composite Dialogue on track in the coming months. There are other
political and security challenges too, such as in Nepal.
But there is also today a great opportunity in South Asia to create a
virtuous circle of security and prosperity. Greater security can encourage
businesses to invest for the long term; and the greater prosperity which
business generates can in turn reinforce regional security.
If such a virtuous circle can be created, South Asia's potential as a region
will be huge. So the commitment by the members of SAARC [South Asian
Association for Regional Cooperation] to enhance their regional cooperation,
at their Summit in Islamabad last January, was most positive. So too is the
work towards implementing a South Asia Free Trade Area by January 2006,
which is gathering pace. I was struck that some of the SAARC conclusions
directly reflected the model of the European Union, which has eliminated the
scourge of war from our own continent by building economic cohesion.
I first visited India 25 years ago on my honeymoon. Today its economy has
changed almost beyond recognition. And even in the relatively short
intervals between my more recent visits, the changes brought about by
surging growth are unmistakable.
One of the places I visited in February was a research and development
centre run by Astra Zeneca in Bangalore, developing drugs against
tuberculosis. It is the first such centre which Astra Zeneca has opened in
an emerging market and an illustration of how the knowledge-based economy in
India is driving forward growth. Even the pessimists expect Indian growth to
remain at over 6 percent, and for the optimists the estimate is far higher.
Some time between 2020 and 2030, India will become the world's third or
fourth largest economy according to Goldman Sachs, it will overtake Britain
in 2016. Each year, India's vibrant middle class is growing by a number
equivalent to the population of Australia; and 2 million new Indian mobile
phone subscribers are added every month. All this is underpinned by an
education system which produces 3 million new graduates every year, and a
culture which allows creativity to thrive.
That economic success is changing the nature of Britain's relationship with
India. Ours is becoming a truly two-way partnership. Indeed India is now the
eighth-largest investor in Britain, with three-quarters of that investment
going to the knowledge-based sector. Sixty per cent of Indian investment in
Europe comes here, and it has created over 1,100 jobs over the last three
years. At least two thirds of the software professionals who come here from
abroad are from India.
The English language, and the millions of ties between people in Britain and
South Asia, give a human dynamism to our business relationship which helps
trade and investment to flow. In my own constituency of Blackburn, thousands
of people trace their origins to the subcontinent and maintain strong links
with families and friends there and as you all know, that is true across the
But South Asia is just as enriched by these links as Britain. When I was in
India I had the privilege of meeting Karan Bilimoria, originally from
Hyderabad, and the creator of Cobra beer which has sold so successfully in
Britain. I believe he is here today in the audience. Now Mr Bilimoria is
investing back in India to market Cobra there. He is also co-chairman of the
Indo-British partnership for trade and investment. And in that capacity, he
is this summer bringing a delegation of Indian chief executives to Britain,
all of whom are interested in investing here. Mr Bilimoria personifies our
two-way business partnership, which benefits India and Britain alike. And
there are many other role models of that type.
On my visit to Pakistan in March I also sensed a real feel-good factor
backed by 6 percent growth and huge rises in the Karachi stock exchange. The
EU-Pakistan trade partnership agreement, in whose negotiation Britain played
a leading role, has made an important contribution too. Again, that economic
success is paying off in Britain's relationship with Pakistan. Our visible
trade rose 14 percent last year, and Britain is the largest overseas
Meanwhile the improving security situation has allowed us to remove some of
the obstacles to an even closer economic relationship. We have reduced the
level of warning in our travel advice for Pakistan; and direct British
Airways flights there resumed last December. I am glad that at the beginning
of this month we restored our visa service in Islamabad.
In Bangladesh too, British firms are well set to make the most of the
opportunities offered by growth. British companies already supply some 25
percent of Bangladesh's electricity and 15 per cent of its gas. Bangladesh
is now the largest South Asian exporter of goods to the UK after India.
And in Sri Lanka, the Free Trade Agreement with India, along with sound
economic policies, have been allowing the country to benefit from the
economic dynamism of its northern neighbour. They make Sri Lanka an
attractive base for companies wishing to reach the Indian market.
All this makes for a region with vast potential. The crucial challenge for
the future, alongside security, will be to maintain the pace of
liberalisation and competition which so benefits business and economic
So, we will keep on working to break down barriers and disincentives to
trade and investment. It is vital that we make progress on the Doha Round of
trade liberalisation, because removing trade barriers is three times more
effective a tool for development than direct aid. And meanwhile, we will
continue to argue that Indian companies and Indian consumers would benefit
if British firms were allowed greater access to the Indian market especially
in the sectors where our firms are world-beating, such as banking,
accounting, legal services and insurance.
We will also work for stronger safeguards for business in South Asia, such
as a better framework for patents and intellectual property rights. We want
to see air services to India increase. And we will work with the countries
of South Asia, as part of our commitment to their long-term development, to
ensure that the benefits of rising prosperity are shared by all.
The above speech was delivered on 19 May 2004 at a Commonwealth Business
Council event entitled "South Asian Dynamic" which was held at the Reform
Club in London.
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