And British business harkens—partly hopeful, partly sceptical
ALMOST everybody whos anybody in British business was there to listen to Finance Minister P. Chidambaram during his stopover in London last week, en route to the annual World Bank-IMF meeting at Washington DC. British investment has been drying up. It was looking for a new word, a new way. As it turned out, Chidambaram spoke carefully, the businessmen listened politely.
Well over a hundred fund managers attended a lunch meeting hosted by Barclays De Zoete Wedd (BZW), the investment arm of Barclays Bank. Given the recent holding back of FII money from Indian stock markets, this was a critical meeting. But more than the situation on the Mumbai market, the executives were interested in the broader picture.
Which Chidambaram painted, according to a senior fund manager, "in the manner of a government spokesman who says what he is obliged to under given guidelines". The finance minister spoke as though his coalition partners were listening, said another. Some, who have seen a more vigorous and refreshing side of Chidambaram in the past, were looking for a little more than that.
As far as renewed foreign direct and portfolio investments in India under a new government go, London is of critical importance. Not only due to the fact that many investment funds are managed out of here, but also because as the oldest and still the second largest investor in India (after the US), Britain is a major investment hope.
The turnout showed that India is right up there among the preferred investment destinations. Bank of England Governor Eddie George attended a lunch by the Confederation of Indian Industries (CII). Former GATT chief Peter Sutherland, now with investment group Goldman Sachs, hosted a breakfast. In the world of high finance, this kind of presence is read as more than polite. Indication enough that India is given serious consideration.
Chief executives and managing directors of almost every fund attended one or more meetings with Chidambaram. And the British companies represented included giants like British Gas, British Steel, British Petroleum, Boots, British Telecom, Rolls Royce, National Power, Glaxo, Cadburys, Standard Chartered Bank, Unilever.
To them, Chidambaram did some plain speaking. "Its the Americans, the Germans, the Japanese, the Koreans who bring manufacturing into India now, not the British," he said. "The old British companies in India were continuing with more of the same but there is scope now for far more."
That call to enthusiasm, though, drew some doubts. John Baker, chairman of National Power, which had tied up with the Hindujas for a power plant, said that little was moving in the power business. More than three years after the power privatisation policy was announced with much fanfare, there are no projects yet and no power, not even a nearly visible prospect of it. "Come back again," said Chidambaram. "Things have changed."
That was the Finance Ministers theme: continuity and change. And he emphasised that this was not just talk, there was action being taken to back up all the promises. The disinvestment moves in Indian Oil and Videsh Sanchar Nigam Ltd (VSNL) were useful talking points. But Chidambaram stopped short of clearly indicating a time table for them, while, predictably, pointing to the half-full part of the glass. When British Telecom Director Marriott Richard quizzed the minister on the current situation in the telecom industry, Chidambaram spoke of the proposed VSNL disinvestment as a sign of definite progress. When a fund manager spoke about the liquidity crisis and the slowdown in industrial production compared to last year, Chidambaram reeled off figures to show that growth is fine. Yet another manager spoke of the impressive list of approvals but said this was not matched by actual investment. Chidam-barams reply: that with an actual investment flow of about a third that of approvals, the situation "could have been better but is not really worrying". But all the aggression and pat answers could not convert the sceptics. A consultant with a New York-based fund spoke of this show of optimism as "more upbeat than realistic".
Chidambaram was perhaps a little more candid when talking about delays in getting projects cleared. That, he said, is a matter for the states. So pick your states with care, he advised, because some states work these things faster than others. Though he didnt name any states before the foreign investors, he did so at a meeting with NRIs the next day. The states which had the Chidambaram seal of approval: Karnataka, Maharashtra, Gujarat and Orissa.
While the London meetings produced nothing dramaticthey were not expected tothey could be the beginning of a tentative step forward. India has been looked at from afar for too long; it has drawn great interest but little investment. Chidamba-rams visit amply suggested that India as a prospective investment destination is top-of-the-mind as far as British industry is concerned. But whether the finance ministers redoubtable communication skills and suave hardsell managed to erase all unease from the minds of potential investors remains unclear.