Closing in on India-UK FTA, more work needed: UK FM | Full Q&A
Speaking exclusively to CNBC-TV18, the finance minister has made it clear that UK will only sign the deal only if it serves British interest. He also added that listing Indian companies on the London Stock Exchange is being discussed with an urgency.
Free trade agreement (FTA) talks between India and the United Kingdom are closer to being done than ever, however, more work needs to be done that is the word coming in from UK Finance Minister Jeremy Hunt. Speaking exclusively to CNBC-TV18, the finance minister has made it clear that UK will only sign the deal only if it serves British interest. He also added that listing Indian companies on the London Stock Exchange is being discussed with an urgency.
Q: The dialogue that you had with Finance Minister Nirmala Sitharaman, the infrastructure financing bridge that has been launched the significance and the aim of that?
A: Well, India has a big priority on infrastructure, as does the UK because we are both doing the climate transition to net zero economies that means a big, big investment in our infrastructure. The UK has the largest financial center, the most international financial center, actually the second largest in the world. So big pools of capital, that UK-based investors would love to invest in India. This is a great strength for the British economy and we want to unlock that capital. So the infrastructure bridge, is a way of seeing if we can get more international funding for Indian capital projects, using the great strength of the UK as a financial center.
Q: Are you working with certain capital targets in mind per year?
A: No, but I think we are very clear that we want to see real money flow into Indian infrastructure and we would like to see that happen soon. And what that means is removing the practical barriers, so that international investors who may be based in London, but they are very mobile, and they can invest in any corner of the globe, know that they have got the protections they need if they invest in India, and we are very confident we can remove those barriers.
Q: You also said India is ready to explore direct listing of Indian companies on the London Stock Exchange. What level are the discussions on currently?
A: Well, this is again, an example of where the world's fifth largest economy and the world's sixth largest economy are able to capitalise on each other's strengths. And why does this matter? Well, India is Asia’s Silicon Valley, and the UK is Europe's Silicon Valley. We both have big technology hubs, technology, businesses need to raise money, and we want the London Stock Exchange to become Europe's NASDAQ or even better than Europe's NASDAQ. And we want to give that opportunity to Indian companies as well to benefit from being able to raise capital internationally. So it's a very good area where we can both work together.
Q: Any timeline on concluding talks of that?
A: Well, we have had lots of discussions about timelines and I, I always think it jinxes discussions if you start giving a public deadline. But what I can say is that there was an urgency and a determination to conclude these discussions successfully, that I haven't seen before and I think in both countries that comes right from the top right.
Q: Discussions on the FTA and bilateral investment treaty, finance minister Nirmala Sitharaman said that these are going on in a parallel manner on the bilateral investment treaty. What is the progress that's been made during this visit?
A: We have made good progress because we have a common goal, both for the UK economy, and for the Indian economy. We want to unlock capital flows into our fastest growing companies. In London, which is a huge financial center, we have, for example, 2.6 trillion pounds of pension and insurance industry, capital pools. At the moment, the vast majority of those pools are deployed in gilts and bonds, when many of the people operating them would like to invest them in high growth stocks with higher returns. So what we are really discussing now is a way to unlock that opportunity for India. I think it's a big opportunity.
Q: I would like to ask you about the FTA talks. This was also done during the visit of the Prime Minister, Rishi Sunak, both sides decided to give some amount of momentum to those talks. Where are we with the negotiations and how soon do you think we could conclude them? And at this stage, what are your case priorities when those FTA talks are concerned?
A: What we want is to have the most open possible deal with the fewest restrictions on trade. We are a free trade country, we believe in free trade and as the sixth largest economy in the world, this is a big market to open to Indian exporters. I think you will find less reluctance to remove those barriers than you would with the other big trading blocks in the world. So there's a really exciting deal to be done. But it's new territory for India, its new territory for the UK.
I think we are closer to a deal than we have ever been. That doesn't mean it's guaranteed we will get a deal. Rishi Sunak has been very clear will only sign a deal when it's the right deal for the UK. But I think there is a sense of momentum from the prime ministers of both countries that I hadn't seen before. So I am hopeful that we will be successful.
Q: And no timelines for this one either?
A: But I think as I say, if you give a timeline, you can jinx these things. So it better not to have the public timeline. But, I think there's a better chance of doing a deal both on bilateral investment and on trade that I have seen for a long time.
Q: I would like to ask you about the return of economic offenders. Was this also discussed when you met finance minister Nirmala Sitharaman this afternoon and is India also linking this or making it a condition in the FTA? The return of economic offenders, economic fugitives?
A: Well, I think all these details, and it wouldn't be appropriate for me to go into details and what happens when you have these talks is that people say, this is what we want and this is what we really want and this is what we really don't want. It's only when you start to have discussions in those very frank ways that you make progress and that is the progress we are making.
Q: Coming back to the economic and financial dialogue, they were also discussions on cooperation in the Gift City, insurance and pension funds as well. Could you give us details of that?
A: I mean, Gift City is a very exciting initiative and we want to support India in developing Gift City as a major financial center. And of course, that's something with the City of London that we have enormous experience of so we had a lot of discussions about that project. We are very excited about it. We think it's a great thing for India to do.
When it comes to pensions and insurance funds, as I mentioned, we have several trillion pounds of those funds. We are embarking on a major reform in the UK, to change the regulations to make it easier for them to invest in high growth stocks. And as we do that, we hope India will be one of the countries that benefits.
Q: I would also now like you to reflect on the G20 Delhi declaration. It really went down to the last day, the drafts were changed several times. There were15 drafts, lots of negotiations. How do you think all countries including the UK, especially the UK came around to supporting the document? They were very strong sentiments that the UK had on the Russia war against Ukraine. How do you think consensus came about?
A: Well, I think it was a triumph for Indian diplomacy. I think India as the hosts handled a very difficult international situation extremely well. And perhaps they are the only country that was able to marshal everyone together to do a communique. From the UK point of view, you are right, we don't want to tear up an international order that is kept more or less kept peace in the world, since the Second World War, certainly avoided a World War and we were very pleased to see that respecting territorial integrity was part of that communique.
Q: You will soon deliver an Autumn Statement, what are some of the challenges in the UK economy, the global economy that you will try and address your key economic priorities right now?
A: Two things, the short term, we will continue to pare down on inflation as it's happening in the United States, in the euro zone and in India. Because we recognize it's a temporary phenomenon, but it is very important to remove it from the economy. But then in the Autumn Statement, I will be going beyond that. And I will be saying here is a country where the economy has been much more resilient than really anyone predicted.
We have had the fastest recovery from COVID of any major European country, we have had our growth upgraded by the Bank of England, the International Monetary Fund, by the official statistician only last week. When it comes to the industries of the future, the industry is where India has big interest, whether it's developing new medicines, whether it's technology, whether it's clean energy, whether it's entertainment, these are areas where the UK is the European leader. We want to be a scientific superpower, the world's next Silicon Valley, and we want to work with fantastic countries like India, and do it together.
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