India Intelligence Report



 India, Britain Share Terror Concerns

  Visiting Britain right after the North Korean (NK) nuclear test, Prime Minister Manmohan Singh and British Prime Minister Tony Blair concluded their third annual summit and discussed terrorism, energy cooperation, and investment promotion.


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Visiting Britain right after the North Korean (NK) nuclear test, Prime Minister Manmohan Singh and British Prime Minister Tony Blair concluded their third annual summit and discussed terrorism, energy cooperation, and investment promotion. Naturally, the NK tests figured prominently in the discussions and both leaders categorically rejected the emergence of yet another nuclear weapons state.

Britain pointedly refused to lump Pyongyang with New Delhi ’s tests and Blair stressed their “very different situation” as NK clearly breached “their international obligations” whereas India was always “strong on counter-proliferation.” Singh emphasized that India had always “supported the six-party talks” with the intention to “achieve the goal of denuclearisation of the Korean peninsula.” Both nations pointed out that the tests further eroded the non-proliferation regime. Singh went on the offensive to talk about the “clandestine proliferation” compromising India ’s own security” as there was “linkages emanating from out neighbourhood” (referring to Pakistan ’s proliferation of nuclear technology in exchange for NK’s missile technology).

India also promised to provide Islamabad “credible evidence” implicating many Pakistanis in the Mumbai blasts of 7/11. Many officials have openly said that cooperation from Pakistan on the Mumbai blasts is a test of its intentions to develop a joint mechanism to fight terror. While India must keep the pressure on Pakistan , painting it into a corner will not help the proposal because Islamabad ’s domestic politics will disallow such rapprochement. However, Indian law forbids sharing information before the case is filed in court. Blair was not willing to go as far as implicating Pakistan for the Mumbai blasts but Blair reiterated that “terrorism cannot be tolerated, whether it is Mumbai, or London, or Kashmir” and that “no country or government or state should support it.” At the same time, he welcomed the Indo-Pak sidebar at Havana as a “positive outcome.” He indicated that he had discussed terrorism from Pakistan with President Pervez Musharraf by saying that “we went back over this ground.” Some analysts however say that the reference to London , Mumbai, and Kashmir in the same breadth is a shift in Britain ’s policies; but there is nothing to substantiate this summation other than this one statement. However, India and the Britain have agreed on a new package of measures to enhance cooperation in terrorism but did not reveal details.

However, reports indicate that the Joint Working Group (JWG) working on terrorism would be enhanced to accommodate the new level of co-operation. These would include key learning of “practical lessons,” sharing information, and exchanging best practices. This cooperation would cover intelligence cooperation for the 2010 Commonwealth Games in India and 2012 London Olympics. India would also draw a lot from British expertise for security and contingency planning.

Addressing the India-UK Investment Summit, Industry and Commerce Minister Kamal Nath did a sales pitch inviting investments to India claiming that “ India has achieved levels of European productivity at 20% of the cost.” India also had lower labor costs compared to other lower cost countries at £ .63 per hour versus an average of £ 1.1 per hour. Besides labor costs, India also has world-class technical and management manpower and Government policies provide capital cost advantages to companies with a long-term outlook. Britain is the 5th largest investor in India in terms of Foreign Direct Investment (FDI) with a flow of about £ 1.1 billion or about 6% of total FDI mainly into electrical equipment, fuels, and service sectors. Total outward investments from British (Foreign Institutional Investment, Private Equity, etc) totals £ 35 billion annually of which only £80 million reaches India . Major companies like Castrol Ltd, Thomas Cook Overseas Ltd, ECOM Communication Ltd, Scottish and New Castle Ltd, and PowerGen have spearheaded British investment into India . India has become the second largest investor in the UK .

Although Nath’s claims that a “full fledged manufacturing facility in India including roads, power, and building can be set up at about 60-80 per cent of the cost in a developed market” many policy uncertainties and limitations stop the flow of investments. Even if investments into these sectors happen, investors are befuddled by a myriad of archaic regulations, local level corruption, land mafia, and organized protests by some politically motivated non-government organizations.

For India to be a strong contender for FDI capable of competing with China , it needs to focus more on creating a transparent process of approvals that would accommodate views of various stakeholders and has continuity.