Chancellor's speech to the Confederation of Indian Industry

Rt Gordon Brown MP, Chancellor of the Exchequer

Story tools

The Chancellor in his recent speech in Bangalore urges India as a rising power to work with UK as partners in a global economy where the benefits of education, free trade and civil society reach the many and not the few in an inter-dependent world.

Let me say it is an honour for me to be here today in this great city of Bangalore; to be able to address the Confederation of Indian Industry, to meet so many of India's most successful business leaders; and to be sharing a platform with Kamal Nath, your Trade Minister whose reputation extends to every continent of the world; and to be here not only with my colleague Alistair Darling but with 150 of the most senior businessmen and women from Britain, led Lord Karan Bilimoria, the Chair of the Indo-British Partnership Network, along with the Head of the Confederation of British Industry, himself a great friend of India, Richard Lambert.

And it is also a great privilege to have the chance to witness at first hand the astonishing pace of change in India, sense the real dynamism and excitement it is generating, witness the vibrancy and potential of this vast country, facing what is your new tryst with destiny, as you enter a new era in your role in the world.

From my youngest days when an uncle in our family was Professor of Electrical Engineering at the Indian Institute of Technology on exchange from Imperial College London and introduced me to India, I was brought up on stories - and slides on old projectors - of India's great history, your struggles, your achievements and your essential greatness.

Now as the Times of India has rightly said, India is poised: your time is now - "a pulsating dynamic new India is emerging...an India that does not follow but an India that leads" - an India ready to embrace the right to an increased voice, side by side with the responsibilities of an economic openness and enhanced international cooperation that come with it.

And as India today claims its rightful place in the emerging new world order, let me say I am sure that India and Britain together - the world's largest democracy and one of the world's oldest democracies, with our shared history and culture, and common values of understanding and tolerance - can, working in unison, play a critical role as partners in addressing the great challenges of our times.

So my theme today is how cooperating together and with a plan to reform our international institutions, we can ensure that globalisation works to ensure prosperity and opportunity for not just for some people but all people;

Cooperating together to meet energy needs and climate change, we have it in our power to fashion a new alliance for progress, a programme of cooperation across continents, to ensure a secure and safer environment for all;

And up against global terrorism and in a new era of global insecurities, we can together, with a comprehensive approach, become partners in the battle for hearts and minds that can and will ensure security and justice for all.

Let me first congratulate the Indian businesses here today for your individual and collective success - a success story now recognised and applauded in every continent.

The Indian economy today growing at more than eight per cent - a rate of growth that fills every other Finance Minister with envy - an India which has doubled your national income in just 15 years, doubled your share of world exports, lifted over a hundred million people out of poverty; an India that over the next five years will create one in every four of all new jobs in the world, and by 2020 an extra 200 million jobs - more than America, Europe and China combined.

And in less than three decades from now you will be the world's third largest economy:

You are already the world's fifth largest market for telecoms;
The world's fourth largest producer of medicines;
The world's third largest market for new aircraft orders;
The world's second largest producer of software applications;
And are seen worldwide as the first choice office of the world.
Nobody should be surprised about the high tech, high value, innovative quality and the progress from the country that invented the zero, and first calculated the value of "Pi", and is now the only country outside America and Japan to have developed a super computer - a tribute to your enterprise.

I am pleased that today the ties that bind Britain and India together are becoming stronger than ever and our mutual cooperation is now at such a heightened level, that today:

500 Indian companies now operate in Britain with almost fifty Indian companies listed in London;
And with UK now the fifth largest investor in India, India is now the third largest investor in Britain, with 60 per cent of Indian FDI in Europe going to Britain, trade between our two nations now worth £8 billion - growing at the astonishing pace of 20 per cent a year - doubling over the last five years;
All making a reality of the prediction by your Prime Minister, Dr Manmohan Singh, visiting Britain last year that "the momentum in our relations will only gather momentum in the coming years."
So we welcome you - Indian companies - investing in Britain and listing in London - the deepest and most efficient market for foreign companies. I want you to see Britain - the world's most open economy - as your second home, your location of choice outside your country. And in the same way we thank India for welcoming British investments in India, and we will never be complacent because we know we must be competitive and innovative to succeed.

And the family and cultural ties grow too. Britain issues more visas - 375,000 - to Indians than any other country each year, an even higher number of Britons - 500,000 - travel to India. Four years ago there were less than 20 flights a week to India now there are more than 70 direct flights.

And let me here in Bangalore also celebrate the immense contribution of people of Indian origin in Britain: 1.5 million men and women, 2 per cent of the population but over 4 per cent of GDP, including some of Britain's most successful young entrepreneurs - and a mobility between our two countries that is now seeing young British Indians return to the land of their parents and grandparents to set up new enterprises here.

Yesterday our Trade Secretary Alistair Darling held the latest meeting of the Joint Economic and Trade Committee (JETCO), and tomorrow when I meet with your Prime Minister and Finance Minister I will launch the UK-India Economic and Financial Dialogue.

Underpinning all this progress and cooperation is a world undergoing the most rapid and extensive transformation ever seen - in pace, scale and impact of change - the biggest and most rapid shift in production and services the world has seen, Asia now producing more than Europe.

Thirty years ago India and emerging Asia accounted for just one eighth of the world economy;
Ten years ago one fifth;
Now it is almost a third;
And in the years to come half the world's growth will come from China, India and emerging Asia.

The significance of this global transformation, greater even than the changes that brought the world's first industrial revolution, can no longer be underestimated.

Let me put it in context.

A famous British Foreign Secretary said of the 1830s that he had called the new world into existence to redress the balance of the old.

In 1990 another old world order - the world dominated by the Cold War - came to an end.

After 1990 people wrote of a new world order.

What they meant was a new world political order.

What was not forseen then, but is obvious now, was how the sheer scale, speed and scope of globalisation was going to transform the global economic order and change the political order too.

I believe that it is only now, as we see the impact of globalisation, that we can also imagine the full shape of the emerging new world order - a new world economic political and social order driven forward not just by considerations of the balance of military strength and ordinary political power, but by the seismic shift in social and economic power brought forward by globalisation.

And the real question all of us must answer is how we can ensure that the benefits of this new world order can be shared by not just some but all?

I suggest it is by founding this emerging new order first around recognising our essential interdependence, in alliances for progress and by reshaping for the needs of new times our international institutions.

Second, we show the new world order will work for all people best by matching the necessary embrace of openness, free trade and flexibility with an offer to every individual of education - the essential empowerment that allows them to benefit from the next stage of globalisation.

And I would add a further point: globalisation requires at its heart what democracy provides best - openness to the flow of ideas, people capital and goods, the potential of every individual unleashed, and public institutions capable of holding decision makers to account.

And, third we make globalisation work for all by building an alliance for economic and social justice and environmental care - an essential element of the new world order - and by comprehensively, and on all fronts, overcoming the challenge of violent jihadist terrorism.

First, the emerging new world order including globalisation cannot work unless we act on the recognition that we are in an age of interdependence, first stated by John F Kennedy in 1962, when he said that America, authors of a declaration of independence, had now to make a declaration of interdependence.

Because globalisation is about the global sourcing of information, ideas, capital, goods and often even people - a world in which products designed in one country, manufactured in another by companies owned in another, with R & D in yet another - there is a premium on both openness - openness between all countries, large and small, and on making global connections work.

And because global public goods on which we depend such as energy, natural resources, environment and the fight against terrorism can only be secured through cooperation across borders, we need reformed international institutions and more effective multilateral networks.

The post 1945 system of international institutions - built for a world of sheltered economies and just 50 states - is not yet broken, but for a world of 200 states and an open globalisation, is urgently in need of modernisation and reform.

Building on Tony Blair's leadership I believe the next set of global challenges we face lead, in a spirit of continuity, to the next stage of reforms.

The G7 used to be exclusive. Beginning with the UK Presidency, India has been in attendance at meetings of G7 Finance Ministers and as part of the G8 plus 5 group has attended the G8. And I look forward to my friend Mr Chidambaram being present again at the G7 in two weeks time in Essen in Germany.

It is time to formally recognise on a more consistent and regular basis the reality of this emerging new world order.

Together and in the same spirit we should focus on modernisation of the United Nations, so that it has the right role for the modern world, not least an effective peacemaker and peacekeeper.

Let me commend India for being the third biggest UN peacekeeping force in the world.

Let me congratulate the work of India and the new modern and expanded role of NATO in peacekeeping and in ensuring stability - to which others should also contribute - in difficult parts of the world.

And let me say Britain strongly supports India's bid for a permanent place, with others, on a larger security council.

The IMF and World Bank are vital to the economic stability and prosperity of the world. But they cannot be fully effective unless they are modernised to reflect the emerging world order - the IMF to ensure the stability of the whole world economy, with its primary role no longer to manage balance of payments crisis but on crisis, prevention through the surveillance of our economies.

There is now a case for bringing together some of the work of the IMF and the World Bank, and even some of the work of the UN. And as a bank for development, the World Bank should have a focus for the first time on energy security and environmental care.

And let me add that in every area it operates I want to see the European Union move from an inward looking union - the union of a trade bloc Europe - to outward looking internationalists, the union of a global Europe.

Second, a new world order of open markets free trade and flexibility will work best only when, at its heart, all of us are willing to complement our openness and flexibility - and we will make any economic reforms necessary to achieve that with a direct offer of educational to equip each individual with the skills and the opportunity to succeed.

It is an offer, which, with our educational cultural and political traditions, both India and Britain are well placed to make.

And it is important we do so because we should be aware that while we talk of globalisation and its opportunities we must also consider the challenge of globalisation and its discontents.

When I attended the G7 meetings in Washington, I was greeted by a banner entitled "world wide campaign against globalization" demonstrating a public sentiment in may continents that globalisation is not working how it should be.

In particular we know that globalisation, which is giving rise to populism in Latin America, the rise of national champions in Europe, protectionism in the USA, and a sense of unfairness amongst, in particular the youthful populations of many poor countries, needs to show that it can work well and that the richest countries are making an offer that benefits not just some but all citizens.

So in my country we have decided we must be open to trade;

Ensure the most competitive and flexible economy;

And - vitally - that to make globalisation work we must match our commitment to greater openness and flexibility, greater labour, capital and product market reform - for protectionism can only postpone difficult decisions and offers people a false promise that we can stop the process of change - with a real deliverable promise, that we can give people the skills for the future by investing in education, science, technology and the creative industries.

The answer to globalisation is not protectionism to safeguard the old interests of the few, but education that opens up opportunity to realise the potential of the many.

And so the best economic policy is a good education policy.

That is why our aim in Britain is what I detect is your ambition for India: to celebrate and not constrain scientific and engineering exploration and discovery, to nurture the new creative industries, to continuously innovate in new products and services and to create a skilled and adaptable workforce in a nation of ambition and aspiration where there is no cap on potential and no ceiling on talent.

And by making all needed reforms, all necessary legislative changes, reshaping all essential to secure an outward looking country open to new ideas and new reforms that ensures globalisation works for all.

So let me commend what India is achieving: your commitment to raise your education budget to 6 per cent of GDP.

And so we should improve further still the bilateral links between the UK and India.

Today here in Bangalore I have visited high-tech companies and research institutes - through new establishing partnerships and locating new offices - strengthening their links with Britain.

On Friday I will visit Mumbai and discuss with financial service leaders from Britain and India how we deepen our links. I am delighted that our banks and insurance companies sell products here in India and want India to see Britain as the location of choice, as we aim to maintain London as the world's largest, most diverse and innovative, and most open and well regulated capital market.

And then I will go to Bollywood and see our cultural and creative ties. And it is a pleasure this year for Britain to host the International Indian Film Academy Awards.

In each of these areas India is one of the engines of world growth, and I believe Britain must be a full participant and indeed your partner of choice. To help expand all our trading ties further, I am today announcing UK Trade and Investment (UKTI) in India is increasing its support in order to fully fund the Indo-British Partnership Network - my aim is to double exports to India by 2010 and quadruple exports by 2020.

In future years we see education as one of our greatest export earners: it has doubled in the past five years, surpassing insurance, oil and aviation, and by 2020 could contribute to over £50 billion a year to the British economy.

Nowhere is the expansion happening more quickly and with greater results than here in India - reinforcing our cultural and linguistic affinities - and adding significantly to the skills base that will underpin India's place as an economic powerhouse.

Already there are 60 joint programmes, a further 65 research collaborations between British and Indian universities, and over 20,000 Indian students studying in Britain - three times as many as in 2000 - with a further 5,000 students distance - learning British courses here in India.

Tomorrow in Delhi I will present the first UK/India Education and Research Initiative awards for collaboration between centres of excellence in Britain and India.

We want to work with the world class Indian IT industry to make the UK an international leader in the creative and supportive use of IT for education;

We want to promote further expansion in the number of international students at UK further and higher education institutions - such as the partnership between you, the Confederation of Indian Industry, and Imperial College London's new Rajiv Gandi Centre for Innovation and Entrepreneurship.

And we want to promote the role of our and your universities, institutes and agencies as international hubs for learning and research - such as this week's announcement of a new collaboration between the Serum Institute of India and the British Health Protection Agency on a Pan Meningococcal vaccine.

In each case increasing British and Indian cooperation in the innovation and expansion of the high skill, high value added, high tech industries of the future.

Let me say that as you gain greater confidence, as every step of liberalisation and openness has met with success, and as this very openness will be the engine for further growth, we can support each other in fighting protectionist tendencies all over the world.

And let me also say that a failure on trade will damage international cooperation, just as a successful trade round will itself be an important declaration that international institutions can work.

So a resumption of the negotiations to secure a fair deal on free trade is both necessary and urgent. It will require bold steps to break down barriers and force the pace of change.

And so I welcome the leadership of Pascal Lamy who is at this Conference today, and the support that has been shown him by your Trade Minister, Kamal Nath.

But although time is short, I believe the will is there both from the US and from Europe, and both must move on agriculture. Europe has to offer further market access, and flexibilities should be kept to a minimum to ensure a successful outcome. Significant progress by the US must also be made to reduce trade distorting agricultural domestic support. Emerging markets must go beyond what is currently on the table on industrial goods and services.

We must all move forward, and we must do this together. Each of us must all play our part and show real flexibility. And we must all contribute to aid for infrastructure and trade - aid to enable the world's poorest countries to develop the infrastructure that hold them back from participating and benefiting from global trade.

A successful conclusion to the world trade round would be a start to winning the high stakes on globalisation - on which each of your companies' futures as an existing or aspiring global leader in your business depends. It will be a victory for the power of both argument and action. And a victory for both Britain and India, whose future prosperity depends on an open free trade world.

The world order will also work best with cooperation and collective action on climate change and the fast developing environmental technologies.

Prime Minister Nehru used to talk of India's two great shortages - the food shortage and the currency shortage.

Both shortages have been addresses by bold statesmanship.

Now today India, like Britain, faces another critical shortage - an energy shortage with 70 per cent of your energy imported and yet demand potentially doubling in the next 30 years.

And I would like to see an new initiative between on a new partnership on environmental action between our two countries.

Stronger international cooperation and institutions. Stability and structural reform. Free and fair trade. Investment in education. But the new world order that I suggest is one that has to be founded on values - on liberty under the law, the dignity of every individual, participatory and accountable democracies - and this will require a new deal between rich and poor people - and that the benefits of globalisation will be open not just to some but to all.

There are those who define the next stage of globalisation as an inevitable growth in insecurity and inequality. But this depends on the decisions we make. Properly managed globalisation has the potential to make the world a fairer and safer place, breaking down boundaries and uniting people.

In the words of one of your greatest leaders, indeed one of the world's greatest leaders, Mahatma Gandhi: "Whenever you are in doubt apply the following test. Recall the face of the poorest and the weakest person whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to them...then," he said, "you will find your doubts melt away."

And so our international cooperation must include what I have called a modern Marshall Plan to ensure social justice between as well as social justice --- and the removal of poverty ---- within countries.

In India, you face your own challenges in spreading rising prosperity, lifting up the 300 million who still live in poverty, and addressing rural growth and employment. I am proud that India is the largest recipient of bilateral aid from Britain.

Let me congratulate you on your commitment to education for all, our commitment in the follow up to Make Poverty History at Gleneagles, to be achieved by 2010.

Because just as education is critical in providing opportunity and tackling the insecurities of globalisation, so with healthcare it is the foundation for tackling poverty and showing that prosperity and peace are indivisible and that to be sustained they have to be shared. An education commitment, in the words of Amartya Sen, also "safeguards the commitment to freedom and peace."

But we cannot allow terrorist groups with jihadist extreme ideologies to exploit people's grievances to justify a war against us all.

In recent years both India and Britain have suffered terrorist atrocities.

Globally there now Al Qaeda cells growing in Africa as well as Asia, worldwide up to sixty extremist violent terrorist organisations affiliated to or in close relationship to Al Qaeda and 5,000 websites inspired by them preaching violent methods. In Britain our security service is contending with some 200 groupings or networks, totalling over 1,600 identified individuals.

We stand full square against all terrorism, and murderous extremists who practice it.

Our countries will continue to work together - in the words of your Prime Minister - in a "coherent global effort with shared perspectives and commitments to combat terrorism wherever and whenever such attacks take place."

To root out terrorism we, like India, are rightly investing in our military and security forces and our police and intelligence services both at home and abroad - doubling our investment in security since September 11th.

And we are now ready to do more to bring together the national and international fight against terrorism, first through our military security, intelligence and policing, but also by winning the battle for hearts and minds. And there is no place for anti-Americanism as we address common challenges on the basis of our shared and enduring values.

So we must do all we can with counter-insurgency strategies to expose and isolate murderous extremists who practice terrorist violence:

Backing the moderates who are championing reform;

Addressing real justifiable grievances, most urgently acting to put the Middle East road map back on track;

And winning through the power of argument, debate and dialogue, winning the cultural fight against extremism. I believe civic organisations and civil society ---- foundations, trusts and faith groups; links and exchanges between schools, universities, museums and institutes; journals and books; trades unions, sports clubs and societies --- all features of a strong and successful democracies like those of India and Britain - can play a powerful and positive part in championing moderation against extremism.

In this way globalisation can be seen for what it should be: justice on a global scale.

Benefits that make us stronger.

Benefits that bring us closer.

And Britain and India, with our own roles in our own continents and histories that bind us together are uniquely well placed to make globalisation work.

In the words of Gandhi: "We must be the change we wish to see."