Arun Jaitley: Brexit should not be interpreted as a protectionist exercise

The Minister of Finance of India Arun Jaitley said Brexit did not mean the UK was not closing its doors, rather the policy message he has received from the British Government is an extremely liberal one

The Minister of Finance of India Arun Jaitley said Brexit did not mean the UK was closing its doors, rather the policy message he has received from the British Government is an extremely liberal one

Arun Jaitley: Brexit should not be interpreted as a protectionist exercise

28/02/17

By Naomi Canton

The Finance Minister of India Arun Jaitley has said India views Brexit as the UK simply changing the way it takes decisions and wanting to expand and invest more rather than the country becoming protectionist.

Mr Jaitley was in London on a five-day trip, the main purpose of which was to represent the Indian Government at the inauguration of the UK-India Year of Culture 2017 at a reception hosted by the Queen at Buckingham Palace on Monday night.

However, at a question and answer session after a press briefing about the UK-India Year of Culture, held at St James’ Court, A Taj Hotel before the reception, Mr Jaitley was faced with a barrage of questions ranging from the future of Vijay Mallya to the prospects for an India-UK FTA.

“My meetings over the last few months with my counterparts in the UK have repeatedly emphasised that, unlike what’s happening in certain other countries, Brexit should not be interpreted as a protectionist exercise where you are closing your doors to the rest of the world,” Mr Jaitley said.

“The UK is changing the method by which it takes its decisions and by doing that the UK would like to expand and invest more and the policy message we have received is an extremely liberal one,” he added.

“Formal dialogue between India and the UK has not yet begun. We have to wait until the UK’s exit from the EU is complete,” he said, in response to a question over whether waiting for the UK to negotiate its exit from the EU presented a hurdle to a UK-India FTA (free trade agreement.)

“Once that has happened, it’s quite obvious that every country will have its own set of priorities. I won’t use the word ‘hurdle.’ There is a time schedule before any activities can commence. We are currently exploring possibilities, that’s all I can say at this stage,” he added.

Bilateral trade and investment

Mr Jaitley, who had opened the start of trading on the London Stock Exchange that morning, said: “My principle purpose here is to attend the Buckingham Palace reception but London is not without its other activities, so I am using this opportunity to interact with my counterparts in the UK and to reach out to investors, both existing and potential ones.

“As far as the UK is concerned, there are huge areas of interest with investment potential in India,” he said, citing Fintech, manufacturing and infrastructure as examples.

“And it’s mutual, as Indian investors are fairly actively investing in the UK too,” Mr Jaitley added.

“There is a considerable amount of interest in India regarding opportunities in the UK after Brexit and the discussions I have had in the past have indicated that both investors and the Government here are looking at expanding trade with India,” he explained.

Mr Jaitley participated in various roundtables with business leaders and investors during his visit. He also met UK International Trade Secretary Liam Fox and the Chancellor of the Exchequer Philip Hammond MP.

“India has a very important story to tell in the UK because despite the relative slowdown of the global economy, India has been able to carry on with its reform programme fairly actively and the direction of most of the decisions is clear. They have not waivered at all,” he said.

“Public policies are looking to the future and investors are looking forward too,” Mr Jaitley told the mix of reporters and camera people in the packed small conference room, where several were standing.

“It’s obvious that interaction helps,” he said, explaining he had met the CEOs of 100s of organisations at various events in London. He said he was sure these meetings would further strengthen the perception gaining ground that “in the middle of the global slowdown, India remains a bright spot.”

He denied investor confidence in India was low and said it all depended on possible returns and that the Indian economy was expanding significantly.

India is growing at seven per cent and is currently the fastest growing major economy in the world.

Mr Jaitley pointed out that FDI into India has increased, public investment has increased but admitted that the private sector has grown less significantly.

“The private sector expanded during the boom period significantly and today global demand has fallen and there is surplus capacity. Bank lending is low because of their situation and borrowing from other sources like the bond market,” he explained.

Bank consolidation

The Indian Government has had to pump millions of pounds into India’s public sector banks, owing to a sharp rise in non-performing assets (NPAs) and losses since around 2013.

“Last year in the Budget I had announced the policy of consolidating some of India’s public sector banks. It is an important issue for us. Do we need bigger and stronger banks? Our priority is to reduce the level of NPAs, strengthen the banks and then go into further consolidation,” Mr Jaitley said.

The approval of the merger of five subsidiary banks of the State Bank of India (SBI) with the parent bank last year is seen as a pilot case for further banking consolidation. The Indian Government is expected to reduce the number of public sector banks in India from 27 to around eight or nine.

Kingfisher baron

As for what the Indian Government was doing to extradite Indian billionaire and ex-Kingfisher chief Viyay Mallya, who is accused of defaulting on loans of 9,000 crore (approx. £1 billion) after Kingfisher Airlines, once India’s second biggest airline, collapsed in 2012, Mr Jaitley said: “As far as the Government of India is concerned we take this issue of defaulters against the financial system of India very seriously. We have already sent a strong signal.  The Government of India will send its full support to all institutions on this.”

Once known as the ‘King of Good Times’ for his flamboyant lifestyle, Mr Mallya, the founder of Kingfisher Airlines, has been living in Hertfordshire since last year. Last week the former chairman of United Spirits was photographed at an event in the UK promoting a new Formula One car.

“Some defaulters are finding refuge in certain other jurisdictions and exploiting those systems that exist in other parts of the world,” Mr Jaitley said, carefully not naming Mr Mallya. “Our investigating agencies are using every bit of law to recover their assets, attach their assets in India and approach our counterparts overseas through the correct legal procedures to make sure we can get these people held responsible as per the law. Whenever there is the opportunity I do use it to discuss this with my counterparts in the UK,” he added.

On the topic of Delhi Chief Minister Arvind Kejirwal’s application to seek details of Mr Jaitley’s bank accounts and income tax details in a defamation case lodged by Mr Jaitley against Mr Kejirwal and other AAP (Aam Aadmi Party) leaders, Mr Jaitley said: “Most of his [Arvind Kejriwal’s] applications have been dismissed.”

Srinivas Gotru, Director of the Nehru Centre and Minister (Press Information & Culture). Finance Minister of India Arun Jaitley and the High Commissioner of India to the UK Mr Y.K. Sinha

Director of the Nehru Centre and Minister (Press Information & Culture) Srinivas Gotru, left, Finance Minister of India Arun Jaitley, centre, the High Commissioner of India to the UK Mr Y.K. Sinha, right, at the press briefing to announce the UK-India Year of Culture 2017

Demonetisation

The questions then moved onto demonetisation, an unexpected and sudden move by Indian Prime Minister Narendra Modi on November 8, 2016 to ban Rs 500 and Rs 1,000 currency notes.

Whilst some in India view demonetisation as visionary and revolutionary, it has been heavily criticised in other quarters for its adverse impact on the rural economy which relies on cash and informal credit, for causing chaos at banks having to cope with a shortage of currency notes and crowds of people and for having an adverse impact on the entire corporate sector.

The stated objective was to rid the country of ‘black money’ used to fund illegal activities, to target wealthy tax evaders, as well as to move towards a cashless economy.

Mr Jaitley said: “One of our principle objectives was to bring together the informal or shadow economy and the formal one. And to make the economy more compliant and to move towards digitisation. It seems to have been an important step in that direction.”

The UK-India Year of Culture 2017 is a year-long celebration to mark the 70th anniversary of India’s independence and celebrate the cultural ties and long-standing relationship between India and the UK. It was first jointly announced in 2015 by Prime Minister Narendra Modi and the former UK Prime Minister David Cameron when Mr Modi visited the UK.

The commitment was reiterated during British Prime Minister Theresa May’s visit to India in November 2016. The year will see a vast programme of cultural exchange taking place in both countries, organised by the Indian High Commission in London, the Ministry of Culture in India and Indian festival producer Teamwork Arts.

“There is quite a heavy calendar of events organised by the High Commission of India in London and the British Council is organising its own events in India and this represents a very important opportunity because we have had an extremely close relationship with the UK through the decades and we hope this will continue in the future. It is a relationship between countries and between peoples and it has expanded to other areas,” Mr Jaitley said.

Mr Jaitley also congratulated the Indian Journalists’ Association on its 70th anniversary which takes place this year. The association was set up in May 1947 as a representative body for UK-based  journalists covering India.

”Papers are only a small part of the game now,” Mr Jaitley said, referring to the rise of digital media.

“From relatively an important but a suppressed role back in 1947,” he said, addressing the journalists, which represented predominantly the Indian media in London, “you are now more than a mainstream player, as far as India is concerned, because London is unquestionably one of the most important news centres in the world.”
naomi.canton@asiahouse.co.uk

Dr Shashi Tharoor, former UN Under-Secretary-General and currently a Congress MP and Chairman of the Parliamentary Standing Committee on External Affairs, will brief Asia House corporate members on India in the ‘post-globalisation’ world at a private briefing  to be held on Friday, 3 March. For more information click here.