ORF India-UK Technology Partnership Conference

Posted by Karan Tripathi at Dec 01, 2015 02:27 AM |
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As the consequence of Prime Minister Narendra Modi’s much anticipated visit to the United Kingdom, representatives from stakeholder groups such as government and industry came together at Observers Research Foundation, Delhi, to deliberate upon various facets of India-UK Technology Partnership.

The spectrum of gathering had representation from companies such as Rolce Royce and ADS as well as from British High Commission and Indian Administration. The meeting was preceded by an informal tea session where all the dignitaries had one-to-one conversations on topics like Digital India, Make in India and investment in defence sector.

Amitabh Kant, Secretary, Department of Industrial Policy and Promotion

The conference was commenced by the opening address of Amitabh Kant, a man who’s associated with the Central Government on the Make in India project. The entire address of Mr Kant was centred on the scheme of Make in India and by presenting a series of facts he also highlighted the areas on which both India and UK have to work upon. Following are the certain takeaways from his illustrious address:

  • When the world has become a barren economic landscape, India is riding on a growth rate of 7.5%. The government, however, wishes for a higher rate of 9%.
  • In order to make the Make in India scheme a success, the government of India is taking various steps such as making India a simpler place to do business by removing archaic and restricting laws, digitization of governance, rigorous opening up of the economy, integrating itself with the global market supply chain and clearance of 15 sectors where conditions were involved.
  • The government is also pushing for almost 100% Foreign Direct Investment (FDI) in sectors such as construction and infrastructure and increasing the bar for Railways as well. There’s also a rise in number of young and upcoming entrepreneurs in India who are attracting investments from foreign players such as Softbank.
  • India is becoming a hub for global Research & Development (R&D) as many companies are setting up their R&D headquarters at Hyderabad and Bangalore.
  • The total amount of FDI inflow from UK is $22.56 billion. The major contributors to this figure are HSBC, Standard Chartered, Vodafone, Barclays, Uniliver, etc. This amount accounts to 8.5% of total inflows to India.
  • The most concerning figure is the share of India in the total outflows of the UK to the world which stands at a meagre rate of 1.19%. On the other hand 74% of FDI projects in UK are by Indian companies such as Tata, Ranbaxy, etc. These companies have also contributed a lot in improving the employment rate of UK. Moreover, India’s exports to UK are higher than its imports.
  • PM Modi’s visit to the United Kingdom led to the meeting of CEOs from both sides. The issues raised by CEOs from UK included consistency and predictability of India’s tax regime (with reference to Vodafone case) while Indian CEO’s highlighted problems in UK’s visa regime.
  • London should play a pivotal role in providing investment in infrastructure. In addition to this, long term lending is required railways and roadways. In pursuing the given policy, more awards are rolled out by the railways then the last several years. Indian banks have raised their resources through Rupee bonds.
  • Both countries are working towards realising National Infrastructure Investment Fund (NIIF) which will be a joint partnership between NIIF and UK government. India, on the other hand, shall create fastrack mechanism to expedite the clearances of UK projects.
  • New involvements in the field of design, patents and innovations are also desired. India is looking forward to have a technological collaboration with London which is the finance sector of the world.

After his address, a question was extended to him by one of the panellists which queried about UK investment in defense sector. Mr Kant replied to this question by saying that India is increasingly trying to ease out routes to defence FDI. He said that 16 articles from licensing route have been taken out and the government of India is working on defense procurement policy. He concluded his answer by quoting various defense collaborations between Indian companies with foreign players such as that of Tata and Boeing.

Glenn Kelly, Department of Security, British High Commission

Mr. Kelly continued the proceedings with an address which was focussed on government’s approach towards India-UK Technological Partnership. He highlighted British departments such as UK Trade, Investment, Defense and Security Organisation which is a joint venture between Foreign and Commonwealth office and Department for Business. He talked about certain figures which explained UK’s defense export policy. According to his address, UK’s share in defense exports is 10 billion pounds which is 2nd largest in the world and its security exports stand at 6 billion which is 6th largest in the world.

Mr. Kelly saw PM Modi’s visit to UK as a good move towards defense diplomacy and bilateral defense relations. He talked about UK defense and technology R&D departments such as DSTL and Qinet which handle research on defense matters too sensitive to do in private sector. He also mentioned that UK defense and security industry is a home to world’s largest aerospace sector. There are more UK defense SMEs than France, Germany, Italy, Spain, Norway combined. He also highlighted that India is not an easy place to attract defense SMEs.

Mr. Kelly also talked about various government initiatives that deal with security exports to India. UK government has created a Triple Ministerial Lock on refusal especially for India. Till now, only 0.5% of export license requests have been refused. He also mentioned the TEPIDOIL model of security exports which deals with bilateral military collaboration for training equipment, personnel, information, doctrine, organisation, infrastructure and logistics. Mr Kelly constantly emphasised on military to military links and enabling genuine strategic engagement between two countries.

Mr. Kelly concluded his address by highlighting certain Technical/Commercial issues related to India-UK partnership:

  • FDI cap: Management of technology is too expensive to develop.
  • Protection of Intellectual Property: Indigenisation of reverse engineering.
  • No Cost No Commitment (NCNC) Trials – risk of developing technology for a trial that could be cancelled.
  • L1: Not conducive to developing latest technology

Mr. Kelly’s address posed a very significant question to the panel: Is there a need for a new Government to Government (G2G) partnership on defense technology or is it the responsibility of UK and Indian industries?

Steven Gillard, Vice President, Defence Customer Business - India at Rolls-Royce

Mr Gillard, who was earlier a bureaucrat at UK Ministry of Defense, started his address by highlighting uniqueness in India-UK defense security relationship. He said that Indian culture is engrained in British conscience so much so that it helps businessmen to go an extra mile for India. By citing the example of Rolce Royce, he mentioned that the company’s engines have been made in India for past 16 years which empowers the engineers from places like Bangalore. According to Mr Gillard, the uniqueness of India-UK defense security relationship lies in our willingness and ability to participate in Make in India campaign.

Mr Gillard asked everyone on the panel to share their “breakfast table” thoughts on this issue. He assured that UK entrepreneurs are willing to invest in India. He also deliberated the idea of not only technology transfer but also capability transfer. Capability transfer is related with the notion of self reliance.

Panel Discussion

After the address of three keynote speakers, the agenda was opened up for a general panel discussion. This discussion went for almost 40 minutes where all the dignitaries contributed their perspectives, questioned the points laid down by keynote speakers and tried to come up with an alternative mechanism.

The discussion started with the ORF representative highlighting the presence of rampant corruption in defense and security deals for the support of which he quoted the example of Bofors. This led to many panellists believe that Government to Government deals should be encouraged as they work really well, there’s more transparency and there aren’t many blockades.

One of the panellists questions the address of Mr Kelly by saying that NCNC trials are not a technological issue but a procurement issue. There are so many capabilities but facts on grounds are miserable (quoting the figure indicating India’s share in total UK outflows from Mr Kant’s speech). Mr Kelly’s approach was also questioned on the fact that UK defense industry has been very aerospace centric. Mr Kelly replied to this question by saying that UK doesn’t own the portions of its own defence industry.

The representative from ADS put forward a caveat saying 1980s was the era of doing business with the Soviets, and then came the Americans and Israelis. UK has been neglected by India’s bilateral defense trade priorities. Other panellists questioned UK’s willingness to be co-dependent and not just co-development in defense R&D sector. The current frustration would be solved only with reforms in our civil and procurement mechanism.

While replying to Mr Gillard, one of the panellists said that co-transferability of technology and capability has to be both ways due to existing geo-strategic relationship. It would be very arrogant for UK to say that it’s a one way street.

The representative from the Indian Navy started his argument by mentioning that in 1960s, 80% of ships in Indian Navy were from UK. He further said that UK has to leave the mercantile approach at work with India through Make in India mechanism. Mr Gillard replied to this argument by saying that due to Section 17 of Defense Procurement Policy of India, UK SMEs are struggling to enter Indian markets. He said that UK entrepreneurs need to be told that India is a long term market and there’s a lack of government support.

In the end, Mr Kelly and Mr Gillard assured Indian representatives that UK defense sector is very much willing to collaborate with India and investment in Indian defense and security sector will not only be pushed through DRDO but also through SMEs on both sides.

On this note, the meeting was concluded and all the dignitaries proceeded for lunch and continued their personal interactions and clarifications.

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