'Businesses must know the rules of the game... If it becomes unpredictable, it is damaging'
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Welcome to Walk The Talk, Prime Minister.
Very good to be with you. Thank you very much... It's great to be back in India for my third visit over the last six-seven years. This time, we are bringing the biggest ever business delegation that has ever left Britain's shores. It's not just business, but sport, culture, arts and universities.
From museum to universities to Virgin Atlantic to Debenhams to everything.
We think the partnership between Britain and India can be a very deep, a very special partnership. We are incredibly impressed with what is happening in your economy and the big changes... and we want to be your partners..
...in spite of our coalition politics, which is spicier than yours and even more unpredictable?
I gather. We probably have lessons to learn there too. All politicians face challenges and difficult decisions and clearly, India is no exception. But your opportunities with your economic growth and the potential with your young population are immense. So we want to work with you as you make these decisions.
Did you ever exchange notes with Manmohan Singh on how to manage a coalition?
We haven't discussed that, but maybe this time I will ask him. He is more experienced than me and, as you say, there are more parties in his coalition.
I bet he has a thicker skin than yours.
Maybe, I don't know. I will ask him. I think he has done an excellent job though. He is a very good partner, we work closely together. We have a very frank and candid relationship. It's one that I value. I always joke with him that I have only been to one British university, and he has been to two — Oxford and Cambridge. So he is a great scholar too.
Third time in India. But first time in 20 years that a British PM comes to Mumbai.
Well, I came to Mumbai when I was the leader of the Opposition, some five years ago, and I was incredibly impressed by the vibrancy, by the growth. But obviously then the big bridge across the bay was not constructed. But coming this time and seeing that was like a symbol of the immense change that is taking place in your country. This is a key financial centre and Britain is a big financial player and it is right for a British prime minister to be here. When I became leader of the Conservative Party, my first major visit was to India. When I became the Prime Minister, my first major visit was to India and within two and a half years, I am back again with a big business delegation.
Why this focus on India?
I think we have got special things to bring to each other. If you look at Britain, I am very proud that Tata, one of your great businesses, is transforming the British steel industry and transforming the motor industry with Jaguar Land Rover. We think we have a lot to offer to India too. You are going to be providing 40 million new university places. We have got great universities to work with you on that. You will be doubling your spend on healthcare. We have fantastic hospitals in the healthcare businesses. You will be building motorways, railways and infrastructure. We have great architects and planners. So I think the partnership — that is what we should be building. And in doing that, we have 1.5 million Indians living in Britain making a massive contribution, many of whom run successful businesses, who I brought with me to India.
This idea of a Mumbai-Bangalore corridor comes from this?
As the Indian economy thinks of how it is going to plan and expand, the idea of having a corridor of new towns along that route to help drive economic growth, I think, is an exciting one. So we have architects, planners and designers here to help discuss it with you and if this idea takes off, we would like to be a part of it.
Why leave it all to the Japanese?
Well, exactly. Look, someone said the Japanese have motorcars to sell, the Germans have machine tools to sell. We like to think in Britain, we have everything. We have insurance, banking, retail, motorcars, manufacturing, many, many things to offer. And also, I stress this point that we haven't come just with business. We brought museum curators, we brought Premier League football clubs and brought great things like the British library... And there is the people-to-people relationship too.
How are Indo-UK ties different from the Indo-US relationship?
I think there is obviously the past, which I think we should draw strength from... culture, language and history. There is also the people-to-people relationship. Of course, there are many Indians living in the USA. But I think the British-Indian community of around 1.5 million is making a big contribution. So I think there is the past, the family ties and then there is the future... I think we can make it a strong partnership.
Do you think it has quite reached the level it should have?
No, I think it can be much better. The signs are good.
Is it in spite of the history, or is it because of it?
I think we have not worked hard enough. I think that Britain now needs to look outwards beyond Europe and think why can't we do better at restoring old friendships and making new friends... The signs are good. Britain is now the top European investor into India. Half of Indian investment into the EU comes to Britain... The basis is there.
But you said that looking beyond Europe, it will get people's attention immediately, particularly after your speech at Davos.
Look, Britain has an important role to play in Europe. The single market is the biggest anywhere in the world and we are a part of that. I want us to reform the European Union. It has become too bureaucratic, too inflexible. It needs to be more competitive. I want us to reform it. But I want us to stay in it... The economies of the south and east of the world — Indonesia, India, Brazil and Malaysia — have so much growth and vibrancy that a country like Britain should be going back to its past, where we were much more traders, investors. We need to get that again.
Given the focus you seem to have on universities in your delegation and also in your talks, it looks like you really want our students. Is it just about getting admission revenues?
No. When we became the government, we closed down a lot of bogus colleges that were attracting people who were coming not to study, but to do unskilled labour. What I want is quality. I want the bright Indian graduate who wants the choice of university to choose Britain and we are saying that having sorted out the bogus colleges, there is now no limit on the number of Indian students who can come to Britain, if they have an English language qualification and a place at a British university. No limit. The point is not to simply benefit our universities. If your students come to my country and if my students go to your country, they will want to work together, do businesses together, share experiences together, and that is how we will succeed in the modern world.
Are they also welcome to stay on and work?
Yes, they are. If they have a graduate job, they can stay and work. Now, this is an important message. Ambitious Indian students coming to British universities can get a place and stay if they have a graduate job, and I think that is a good offer.
So will you relax the visa issue for them?
They have to renew their visas from time to time. They will be starting to make some of their career in the UK.
How does one read that in view of your approach to immigration from, say, European south?
When I became the PM, we had a very chaotic immigration system. We had huge amounts of unskilled migration coming from other parts of the world to the UK, even though we have many unskilled people in the UK we should be helping to get jobs. But we should be looking at the quality of immigration. We want bright students, entrepreneurs. We have introduced a proper focus, controls...limits, yes, but with a proper focus. And there is no limit to the number of Indian students who can come and study in British universities.
Given the abysmal standard of our universities and the shortage of higher education, we will keep that supply line running. We are not about to reform our education in a while.
I hope you will. You have 500 million people under the age of 25. For countries with that many people under the age of 25, the key will be to educate, skill and equip them to be part of a successful economy... So we stand ready with our colleges, schools and universities to help. We have an aim of training 1.5 million Indian teachers by 2017. We have skills programmes and we want to work with your colleges.
When you think your job as tiring... do you ever think of governing India for a day?
India is a bigger country with many regions and issues. I don't think PMs are transferrable. I have plenty to focus on in the UK.
We have been reporting on the letters you have been writing to our Prime Minister. You have a few issues to sort out in India. One of those is taxation. You said that there has to be a difference between tax avoidance — what we call tax planning — and tax theft. Particularly as it applies to Vodafone. Where do we stand there?
What I would say to the Indian government, business and people is that investments into a country like India of a company like Vodafone are very valuable. These companies are useful in spreading technology, bringing good jobs, helping people connect through mobile phone networks. We have to make sure that whichever country we are running, the system has to be fair and predictable on what tax they would pay. I think that is absolutely the key thing. They must invest knowing what the rules of the game are, knowing what the taxes are. They must pay them, and I hope no country hides away from paying those taxes. But if it becomes totally unpredictable, then that is very damaging for those businesses. And I would argue for the economy as well.
It seems that the government of India and Vodafone are talking now.
They are talking. Progress is being made, making sure that it is predictable and this issue is settled.
The principal argument on the other side is that India is not a tax haven. A transaction of this size, somebody ought to have paid tax somewhere.
I totally understand that. If you listen to Vodafone, they would say they are paying taxes, they are making a contribution. Their argument is about consistency and predictability. The Indian government and Vodafone must sit down and discuss and hopefully reach a conclusion where everyone can see that it will be consistent for other companies as well in the future... reach a settlement and then everyone can know there is a fair situation.
What about other companies?
I brought some of the biggest companies in India like BP. We think international law firms should be able to invest in India and set up practices in India. There is the issue of insurance companies....
If you can expose the apple grower of Kashmir to the apple grower of Washington, why not expose an Indian law firm to a foreign law firm?
We have to do both, that is the point. I have come to India knowing that there are things the Indian government would like me to do. Same-day business visa service, we are going to do it. Access to more modern technology, we are going to change our rules. Message for students coming to the UK, we have made that clear. If we deal with our barriers, I would be saying to the Indian government, 'I know you want to examine some of your barriers, and letting insurance, banking, retail, invest into the Indian economy will help the Indian economy grow'. Obviously, we are discussing this as part of the Free Trade Agreement between the European Union and India and I think the Free Trade Agreement could be great for both sides. But both sides will have to do some giving.
You have some issues with BP as well on some clearances.
BP has made one of the biggest investments that any individual company has made into India in the recent years and I am proud that a British company is doing that. I am meeting with BP and some Indian businesses later. We will be discussing issues they might have... I think they can be resolved. BP is a very reputed company with investments all over the world. I think the opportunities for India to have greater energy independence through developing its resources are very promising.
Inevitably, one problematic issue remaining on your agenda is the AgustaWestland helicopter.
The owner of AgustaWestland, Finmeccanica, is an Italian company. This is really an issue for Indian authorities and the Italian authorities to settle. My interest is just to make sure that AgustaWestland — which is a good company and makes good helicopters — continues to have a good name. And we must make sure that happens.
One of the alleged beneficiaries is British. So have you been approached by India to help in the investigation?
I haven't received an approach. Any approach we get, we will obviously cooperate with in full. We have independent prosecuting authorities in the UK, the Serious Fraud Office and others. We also have in the UK a very strong anti-bribery law, which was introduced under my government. It is one of the toughest anywhere in the world... I think there is a problem throughout the world, it's not a British problem or an Indian problem. Throughout the world, there is a problem of corruption and bribery and we need to make sure that there are proper rules in place to deal with it.
Ownership is in Italy, but production is in the UK. Would you have any advice on how this should be handled?
Well, what matters is getting to the truth... Indian and Italian authorities will want to get to the truth of what happened. If there is an unacceptable practice, that needs to be dealt with. My interest is that there are people who manufacture helicopters, who work very hard and who produce a very good product, and I want to make sure their future is safeguarded.
So separate the machine from the scandal?
It can be done?
Yes... Also, I make the point that AgustaWestland sells helicopters all over the world. It didn't actually employ more staff to take on this particular order... I will always support it, and make sure that it continues to do its good work.
Let me ask you something. When you come to India, almost anybody you meet is about twice your age, starting with the Prime Minister. How does it work?
I think in periods of our history, we have had much older prime ministers. We even had younger prime ministers than me. Pick the younger.
I asked David Miliband this. There were some stories about his meeting with Pranab Mukherjee.
Look, I think we should always respect our elders. We should learn from people who have done these sorts of jobs for longer than I have. Manmohan Singh has been the Prime Minister for many years now. He is very wise, very experienced.
There is a banner at Marine Drive, which says Indian politicians should learn from the Pope.
I think that's a bit unfair. I've enjoyed working with Manmohan Singh. He is a very wise man and I listen very carefully to what he says.
I hope both of you listen to each other and say the right things to each other. I hope you also get to check out the Kerala fish curry you wanted.
Yes, I will. I need to get back to Kerala. Well, I did once have a holiday in Kerala. It was very beautiful. I have been to Cochin as well. I have travelled a little in India, but there is a lot more for me to discover.
Transcribed by Vishal Menon