Barry Gardiner
MP for Brent West · Labour · United Kingdom
“Sir Desmond, imagine that the top brains in the country’s security and intelligence community produced a report that told you how to save the world. You would want to see it, right? Well, the report we are discussing is not about how to save the world; it is about what happens if we do not.”
“The nuclear threat will rise as clashes between nuclear powers become more frequent. Those are the cold assessments of the Joint Intelligence Committee. The Government were right to think that those assessments might scare people—they scare me—but they were wrong to think that they could hide them from the public.”
“The Minister will know that the grant structure on which UKRI is based gives out grants for a maximum of three to five years. Very few are for five years—most are for three years or under—yet the sort of long-term scientific development that my hon.”
“My hon. Friend is making a superb case for the importance of funding for her deep earth facility. I had the privilege of going to the National Oceanography Centre’s deep oceans facility, and the innovative science there on carbon sequestration is superb.”
“The Prime Minister has spoken powerfully about the devolution of power and giving back control. Will he therefore ensure that the proposals for commonhold and leasehold reform, for which 5 million leaseholders in this country are waiting with bated breath, do give that power and control back to those people, through the right to enfranchi…”
“We know how much land there is in the UK, and we know the extent of our inland waters and seas, so we can know how much we have to do to protect them, as we are required to do by target 3 of the global biodiversity framework.”
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“In a recent response to a written question to the Department, I was told that the shortest period that the Department had allowed in the previous 12 months for any tender where the contractor would be paid more than £1 million was 28 days, yet LOCOG allowed only 10 days for someone to bid to pay a sum, publicly estimated to be £7 million, to sponsor the wrap. Does the Minister think that LOCOG would have set the tender window at a mere 10 days if Dow Chemicals had not already been lined up as a sponsor? In his letter to London assembly member Darren Johnson, Lord Coe said that the Government took the decision to ditch the wrap in order to achieve the announced saving. That prompts several further questions. What discussions did the Department, the ODA and LOCOG have about the decision to put the wrap up for sponsorship?”
“Why were the media given the figure of £7 million as the projected saving, when the actual saving was known to be only £1.5 million? On 8 February 2011, it was reported that the tendering process for a company to sponsor the wrap would go ahead, with expressions of interest due by 18 February. That was an extraordinarily short time in which to source a major supplier. The public might consider it inconceivable that only 10 days were allowed for such a major tender, unless there had been clear and ongoing discussions with potential partners before the announcement.”
“It was also reported at the time, by the tenacious Sunday Express journalist Ted Jeory, that the Secretary of State for Culture, Media and Sport had been informed that finding a private sector partner for the wrap was highly likely—that was in an e-mail from the Department on 16 December. We now know from Architen Landrell, a UK company based in Chepstow, that it was appointed under a tier 3 contract by Sir Robert McAlpine, the main contractor for the stadium’s construction. Architen Landrell was asked to produce eight test panels and give a final costing for the stadium wrap, which it did, at a price of approximately £1.5 million. Two questions arise from that. Why did the Secretary of State believe it was highly likely that a private sponsor would be found for the stadium wrap?”
“Yes indeed. I am grateful to my right hon. Friend for his intervention. First, I will raise my concerns about the chronology, openness and transparency of the Olympic wrap procurement process. I understand that just three months after Dow was confirmed as an official partner of the International Olympic Committee, LOCOG chose the Olympic stadium wrap as one of the areas of the Olympic budget that would be cut. I accept that that was a perfectly proper response to the spending review, but reports from LOCOG at the time estimated savings from the wrap at £7 million.”
“Let me repeat the words of LOCOG’s sustainability code: “This means we want to do business with responsible suppliers and licensees; companies who treat their staff and sub-contractors well, who understand the nature of the products and materials they are supplying, and who recognise their responsibility to protect the environment and foster good relations with their local communities.” When LOCOG awarded the sponsorship contract to Dow, was it aware of the pending criminal charges for culpable homicide against Dow’s fully owned subsidiary UCC in the Bhopal criminal court? Was LOCOG aware that Dow’s fully owned subsidiary, UCC, was declared by that court as an absconder from justice as long ago as 1992, and that the company remains an absconder from justice to this day?”
“He said: “A false campaign has been launched by the Dow Chemicals saying that the matter has been settled. It is not correct. The case is still pending in the court and no final compensation has been made.” Why have LOCOG and the Government chosen to believe Dow Chemicals over the acting president of the Indian Olympic Association?”
“The documents prove that, far from being a separate company, Dow Chemicals controlled and manipulated its wholly owned subsidiary, setting prices and setting up supply chains to secure profits for Union Carbide products that in India were illegal. As Tim Edwards from the Bhopal Medical Appeal said, “these documents...show Dow shielding UCC and obstructing justice. If however Dow is also misrepresenting its relationship with UCC, then it is obstructing justice and shielding itself from trial. Either way, LOCOG’s insistence that Dow is a fit sponsor for Britain’s Olympics appears perverse.” In a letter addressed to IOC President Jacques Rogge, a copy of which was sent to Lord Coe, V. K. Malhotra, the acting president of Indian Olympic Association, stressed that there were active court cases against Dow.”
“Significantly, the US court accepts that that is a distinct case from the 1984 disaster and that it has not been dealt with under any pre-existing settlement. In New York, Dow’s wholly owned subsidiary UCC has pleaded that only Indian courts can order it to remediate the site; but in India, both Dow and UCC have pleaded that the Indian courts have no jurisdiction over them. Dow has consistently claimed to the Indian authorities that Dow and UCC are independent entities and that on those grounds Dow should be held immune from prosecution in relation to the Bhopal disaster. Documents made public in The Independent by Nina Lakhani two weeks ago, however, have revealed that Dow Chemicals secretly traded through a network of intermediaries to avoid a legal ban imposed after the Bhopal tragedy on the sale of UCC products in India.”
“Is he aware that Dow is a named respondent in a forthcoming curative petition in India’s supreme court that aims to address the inadequacies of the 1989 civil settlement made by Union Carbide of $470 million—a figure that equates to approximately $600 per victim? Compare that with what happened in the Gulf of Mexico and the payout that the American Government demanded of BP. By some ironic coincidence, the hearings on the petition were granted on 28 February 2011—the same day the sponsorship contract closed—by a five-judge bench that included India’s chief justice. Union Carbide is also subject to a civil action in the southern district court of New York. The action relates to the ongoing contamination in Bhopal through chemical dumping by the company in and around the factory.”
“Gentleman opined of Bhopal: “I do not believe that Dow were responsible and I think we should support them as a company”, let me ask the hon. Gentleman whether he is aware that Dow’s wholly owned subsidiary, Union Carbide Corporation, is wanted by courts in India on criminal charges of culpable homicide? Because UCC is considered to be a fugitive from justice in India, and because Dow wholly owns UCC but has not produced it in court, I understand from legal advice that I have taken that that puts Dow in the position of sheltering a fugitive from justice. Does the Minister’s own legal advice concur with that? Is the Minister aware that Dow Chemicals itself is a named respondent in public interest litigation in the Madhya Pradesh high court, seeking remediation of the abandoned Union Carbide factory site?”
“He also said that Dow did not own Union Carbide “at the time of a final settlement with the Indian Government in 1989” and added that “that has been upheld three times in the Indian Supreme Court”— twice, in fact—which made him confident that “it was a very reasonable decision.” Many commentators have found it frankly astonishing that both LOCOG and the Secretary of State seem to have taken Dow’s claims regarding those cases at face value and repeated Dow’s press lines verbatim. Surely the Secretary of State knows that when someone purchases a company, they purchase both its assets and its liabilities. Before the Minister repeats his Secretary of State’s evidence to the Select Committee, where the right hon.”
“After looking at it very carefully, I…wholeheartedly supported the decisions that LOCOG had taken.” He went on to justify Dow’s involvement, saying that “they did not own Union Carbide at the time of the Bhopal disaster in 1985”— a point made by my hon. Friend the Member for Linlithgow and East Falkirk. In fact, it happened in 1984, but that was perhaps just a simple slip of the tongue by the Secretary of State.”
“I am delighted to have spared the time to give way to the hon. Gentleman, who makes an important observation. I will come back to that in the final section of my speech. Sadly, LOCOG is a private organisation that is not subject to the Freedom of Information Act 2000. On 18 December last year, I therefore wrote to Lord Coe, chairman of LOCOG, asking many of the above questions and many more. To date, he has not seen fit to answer them. When asked on 24 January this year in the Select Committee whether he thought it “appropriate for London 2012 to be so closely associated with a company like Dow Chemicals”, the Secretary of State replied: “Obviously it is a decision for LOCOG, but it is a decision that, as a result of the controversy that we had last autumn, I looked into very carefully.”
“The Minister really needs to get a much better brief because the Olympic programme contract was the contract awarded by the IOC. The contract for the stadium wrap was taken away from the ODA and put to LOCOG precisely because LOCOG was in charge of sponsorship contracts. If the Minister does not know that, he does not understand the core of this debate.”
“I was shocked to see that the result of our investigation was a public statement from the commission that essentially portrays Dow as a responsible company. I had been providing information about Bhopal to commission members and I was stunned that it publicly repeated Dow’s line that it bears no responsibility for Bhopal. I did everything I could to get the statement corrected or retracted. When it became apparent that this would not happen, I realised that the only way to ensure that my name was not used to justify Dow’s position was to resign.””
“Meredith Alexander, one of the 12 sustainability commissioners, resigned in protest over what she believes was the airbrushing of Dow out of Bhopal and into the Olympics. She has made her case as follows: “In 2010, the International Olympic Committee appointed Dow as an international sponsor for the Games. This decision was taken in Geneva, and the commission had no ability to take a stand. Then last year, LOCOG, the London Games organiser, invited companies to tender for a major contract to provide a wrap for the main Olympic stadium. Dow won this bidding process.” That is the point the Minister failed to appreciate. Meredith Alexander goes on: “Many groups and individuals raised questions and finally the commission was asked to investigate.”
“The sponsorship was tendered under a tier 3 arrangement by LOCOG, and it was the body that awarded that sponsorship contract to Dow Chemical. Was LOCOG aware that Dow is a party to a public interest litigation suit in India concerning clean up and environmental rehabilitation of UCC’s factory site? If LOCOG was aware of those issues, how were they considered in the decision-making process on Dow’s suitability as a partner for London 2012 on ethical, social and environmental grounds? Did LOCOG seek any further legal or other advice in relation to the issues mentioned, other than that given by Dow and its representatives? Last month, the procurement process and the Dow sponsorship deal suffered its biggest blow to date.”
“A report by Innovest indicates that Dow failed to disclose in statements to investors its $2 million settlement of a consumer fraud lawsuit brought by the New York State Attorney-General in 2003.”
“This includes seeking suppliers who operate within the laws of their country and who do not have discriminatory practices.” Bearing that in mind, it is difficult to see how LOCOG could justify appointing Dow as a sponsor, given the facts that were known at the time about the company and its wider regard for law and regulation. The key facts are these. In February 2007, the Securities and Exchange Commission in New York imposed a cease and desist order on Dow Chemical for its improper payment practice and improper accounting. In September 2010, Dow was blacklisted by the Indian Government for bribing officials in order to fast track licensing of the chemical Dursban, which has been found to be dangerous to human health in the USA.”
“No, I will not. Meredith Alexander goes on: “And the only way to ensure that the victims’ side of the story was told was to do so in public.” She concludes: “I would like to see Dow take responsibility for the Bhopal tragedy and finally ensure that real justice is achieved for the victims and the families of those who died. This would be a true Olympic legacy.” Finally, I turn to the wider issues regarding Dow’s reputational and ethical suitability to be an Olympic partner. In relation to ethical sourcing, the Olympic Delivery Authority guidelines on procurement policy state: “The ODA will seek to work with suppliers who have a good track record in human rights and who use goods and materials that have been produced ‘ethically’.”
“If he does not do so, he must accept that a cloud will hang over the London games. They will be tainted by a sham procurement process and a sponsor that has shown it is contemptuous of the law, defiant of regulations, willing to engage in bribery and corrupt practices, but indifferent to the continuing suffering of thousands of human beings.”
“She has said: “Even a twelve year old could have found them”. The Minister is not a 12-year-old, and he knows that the public are not naive either. He must not reply with a speech that is long on examples of sustainability and good practice but short on answers to the questions that I have posed about Dow. To assist the Minister in preparing for the debate, I sent all the questions I would be raising to his office— [ Interruption. ] I did so at 3 o’clock this morning, to enable him to come to the House prepared. Today, the Minister should have the courage to stand up and accept that Dow is not a fit and proper company to be a sponsor of the most sustainable Olympic games ever staged. If he does so, everyone would accept that although a mistake had been made, the Government have the determination to put it right.”
“Since then, earlier this month, Dow Chemical lost its bid to overturn anti-trust fines totalling in excess of €25 million imposed by the European Union for its part in colluding to fix prices of chloroprene rubber. Just last week, Dow was penalised and heavily fined for underestimating the greenhouse gas emissions from its Grangemouth plant in Scotland. What is perhaps most incredible is that the Chairman of the Commission for a Sustainable London 2012, Shaun McCarthy, has gone on record as saying: “LOCOG carried out its due diligence exercise with regard to reputation risk in relation to this procurement. At the time, when the bids were being considered in early 2011 LOCOG found no current media, political or NGO commentary that would give cause for concern.” As ever, Meredith Alexander makes the best riposte.”
“The Commonwealth Heads of Government meeting is due to take place in Sri Lanka in December of next year. Given that President Rajapaksa is turning that country into a kleptocracy, that term limits on the presidency have been abolished—turning that country, potentially, into a dictatorship—and that there has been no adequate response to the UN Secretary-General’s commissioner for human rights, does the Head of our Government believe that it is still appropriate to hold the CHOGM there, and will the Queen attend?”
“My right hon. Friend is making a powerful case. Does he recall that, when the housing benefit capping measures were introduced, the Government said that rents would be likely to go down? What would he say to my constituent, a higher executive officer with Her Majesty’s Revenue and Customs, whose landlord has put her rent up by £100 from 12 January? She is below the cap for Brent, but she has been told that she will not be able to have a review of her benefits until 14 June.”
“This man has always worked in my area, has lived there most of his life, and has served my constituents and their children, yet he is being consigned to moving to another part of the country under this legislation.”
“I am grateful to my right hon. Friend for giving way; he has been extremely courteous to the whole House in giving way so many times. May I ask him to comment on the idea, mentioned many times by Government Members, that the scheme will get people into work, including those in long-term unemployment? What does he think that they would say to my constituent, a very senior teacher, who says: “I am a teacher and because of the cutbacks to local councils am unemployable owing to my experience and qualifications as I cost the same as 2 newly qualified teachers…I have survived these past months by selling my possessions and borrowing money” but “these avenues are virtually spent and I am in the situation of having to decide between food and heat, let alone how I will pay for my accommodation”?”
“The Prime Minister says that his veto has left the European Commission in the room to protect against encroachment on single market issues and competitiveness. Will he remind us of the name of the noble baroness who represents the UK on that Commission and of which party will therefore represent Britain’s last line of defence?”
“Yet the Department appears to be shifting its focus to sub-Saharan Africa. The Government are, I think, pushing in the right direction on their India aid programme, but we need clarity about the detail, and we do not have that clarity yet. Will the Minister flesh out what the increased private sector focus will look like, and how and by whom it will be administered? The Government need to provide a sense of security to central and state Governments in India by guaranteeing that any cuts to the programmes will be made for the right reasons, and they need to stop playing up to the hysterical and factually incorrect opinions that too often come from their Back Benches.”
“We need a guarantee that any reductions will be tied firstly to the rate of reduction in poverty, and, secondly, to increases in India’s capacity to bear that burden itself. I welcome the tightening of focus on the three poorest states, but not if it comes at the expense of the many millions of people living in poverty in other Indian states. For example, Orissa, which was the fourth bilateral partner state with DFID, has, in large part through DFID’s work, succeeded in reducing the poverty rate from 21% of its population in 2006 to 4% in 2011. That is a phenomenal achievement. However, the population of Orissa is 36 million, so the remaining 4% means that there are more than 1.5 million people still below the poverty line. That is a population equivalent to the whole of Gabon, Gambia or Botswana.”
“We need a guarantee that when these funds are returned, they will be reinvested in full in India to alleviate poverty there. Another area of concern is the long-term future of the India programme. The Secretary of State has guaranteed funding until 2015. We should certainly support that, but he has also said that he does not think it will continue for much longer, and that he sees it as a short-term programme. That troubles me for two reasons: first, insecurity of funding streams makes planning budgets at national, state and local levels nearly impossible. Deliverers need to be able to count on funding streams in the medium to long term to plan budgets efficiently and effectively. Secondly, although India has made progress in combating poverty, as I outlined, by 2015, 22% of the population will still be living in poverty.”
“Does the Minister propose to enlarge that team to deliver the micro-level projects that such private sector funding may require? In his Christmas comments, the Secretary of State described the fund as returnable to the taxpayer, but neither the India project plan nor individual project descriptions give any explanation of what he actually meant. The most likely explanation is that he was alluding to the fact that a large percentage of the funding will be delivered through microfinancing, which is repayable to the fund, and which can then be reinvested. If that is the case, describing it as returnable to the taxpayer in the UK may be misleading. If it is not the case, and the money will literally be repaid to DFID and then the Treasury, will the Minister tell us?”
“While I welcome the renewed focus on the three poorest states, I think we need clarity. As yet, we have had no comprehensive plan for how DFID will work with the private sector, but only a small number of specific examples. There are hints that much of this work will involve microfinancing, but will the Minister clarify the situation and perhaps expand on what is being done? The Select Committee has criticised DFID’s internal knowledge of, and experience with, the private sector, particularly in-country. The delivery of such a large fund will require a far greater specialist team, but DFID has announced no plans to implement one. In total, DFID has only 58 private sector specialists, divided between all its projects across the globe.”
“We must continue to support India in alleviating poverty. That is an international responsibility, and we must meet it. Will the UK Government commit to tying our aid to India to net reduction reductions in poverty and to India’s increasing ability to pay for poverty reduction itself? In that way, any decision to stop helping some of the world’s poorest people out of poverty would be based on facts on the ground, which can be established and quantified, rather than on what sometimes seem to be the whims of the populist press in the UK. Those who argue for an end to aid should consider how things would be if Britain bordered the world’s next superpower and was surrounded on all sides by failed and unstable states, some with nuclear capacity. Would they then be so critical of relatively high spending on defence and space?”
“As I say, it spends a higher proportion of its annual budget on education than we do in the UK—12.7%, compared with 11.5%. Despite India’s impressive growth and her progress on infrastructure and urban development, and despite the fact that her middle classes have quadrupled in size in the past decade, India simply could not afford to alleviate her poverty on her own, even if she poured all her resources into it. A 2009 World Bank report noted that even if India legislated for a 100% marginal tax rate, the funds raised would plug only one fifth of its poverty gap. The idea has been peddled that India just needs to tax its flowering industries and its billionaires a little more, but that is a myth, and I am delighted that the Chairman of the Select Committee has nailed it this afternoon.”
“I want to take this opportunity to echo the words of the right hon. Member for Gordon and to address that distortion. India is on course to reduce poverty from 55% in 1990 to just 22% in 2015. No other country has ever managed such a sustained reduction in poverty, taking one third of its population out of poverty in a mere quarter of a century. India has put huge resources, proportional to its budget and its GDP, into poverty reduction. It spends a higher percentage of its budget on education than we do in the UK, its free food programme is the largest hunger-alleviation programme in the world and the employment guarantee scheme has been incredibly successful at getting people into work wherever possible. Since 2004, India has increased the percentage of GDP it spends on health, education and social services from 5.35% to 7.2%.”
“However, he went on to say: “Now is not the time to stop the programme in India but I don’t think we will be there for very much longer.” The Secretary of State is an eminently reasonable man, for whom I have tremendous respect, and he has done a first-class job since he arrived in the Department. He is a reasonable man and he speaks reasonably, but others do not always speak reasonably, and the right hon. Member for Gordon outlined their argument. Indeed, in yesterday’s debate on UK-India trade, which took place in this hall, the hon. Member for Banbury (Tony Baldry) put things rather differently. He spoke of India’s economic growth of 7% a year, and said that, with its nuclear and space programme, it had the responsibility to ensure that the benefits of that growth were more evenly shared among its people.”
“Of course, once we ask the question, it is difficult for a proud federal Government such as India’s to say that they still want aid. I think the Government made a mistake in asking that question, but it is on the record, and both countries have set out their position, so it has to be respected. The International Development Secretary gave a mixed message on the future of DFID’s Indian programme in his speech on Christmas eve, and we should probe this further. He defended the Indian aid programme, highlighting the fact that “India is a place where there are more poor people than the whole of sub-Saharan Africa” and stressing the success the Indian Government have had.”
“Its projects are achieving quite significant progress, providing 9 million slum dwellers with access to water and sanitation last year, putting 30 million more children in primary school since 2003, saving 17,000 lives per year by improving health care and lifting 2.3 million people out of rural poverty since 2005. The Indian federal Government no longer believe themselves to be an appropriate recipient of development aid—at least not since our Government asked whether they thought they should receive it. Previous Governments had adopted a different approach, saying that that was not a question they would ask the Indian Government and that they simply wished to provide aid to achieve the millennium development goals for the world.”
“Gentleman outlined, poverty is largely focused in four Indian states: Bihar, Madhya Pradesh, Orissa and Paschim Banga—the state whose name I think he was looking for, which used to be known to us as West Bengal. Between them, they are home to nearly one fifth of the world’s poor. In 2009-10, Britain spent £295.1 million on development projects in India. Of that, 45% went to the Indian national Government, while 48% was spent in partnership with those four states, which are the poorest in India. Britain’s aid targets were health, education, rural poverty, trade development and civil society.”
“I am delighted to take part in this well-informed debate, and I pay tribute to the right hon. Member for Gordon (Malcolm Bruce), who chairs the Select Committee, for initiating it. He spoke with great knowledge and tact, and he put his questions and criticisms in a probing rather than a partisan way. I hope the Minister will be able to respond to many of them when he sums up. I would like the Minister to clarify the Government’s position on aid to India somewhat in the aftermath of the Select Committee report. India is home to one third of the world’s poor and to more than 20% more poor people than all of sub-Saharan Africa. Across India, a child dies every 15 minutes from a preventable disease, one in three people remain illiterate and more than 400 million Indians have no access to electricity. As the right hon.”
“I am particularly grateful to the Minister for addressing the point about the returnability of capital, because it is an important one to clear up. Will he state absolutely categorically that “returnable to the taxpayer”, which I believe is the phrase the Secretary of State used, does not mean that the capital should be returnable to the British taxpayer but that it should go back to the fund, and then, as the Minister said, be reapplied for the alleviation of poverty?”
“Does the Minister recognise that the insistence on the energy performance certificate at level 3 in order to qualify for the new solar PV fix will be anticompetitive in its practice? The industry has said that it may contribute to reducing employment in solar PV down to 8% of the current levels of employment, and yet it is not related to gas, which is used most for warming Britain’s homes.”
“May we have a debate in Government time on the sustainability of the London Olympic games following the resignation this morning of Ms Meredith Alexander as the sustainability commissioner? She said that she resigned in protest against the commission being used to justify the sponsorship deal between the London Organising Committee of the Olympic Games and Paralympic Games and Dow Chemical. She has made particular allegations about irregularities, saying that 12 out of 13 commissioners knew nothing about a report that was claimed to be produced by the commission.”
“On a point of order, Mr Speaker. Have you received a request from the Secretary of State for Culture, Olympics, Media and Sport to come to the House to clarify previous statements made to this House? Those statements made reference to the supposed report for the London Olympics by the Commission for a Sustainable London as the justification for the appointment of Dow Chemical as a sponsor, when the resignation of Ms Meredith Alexander this morning has in fact proved that no such report was prepared by the commission at all. Indeed, 12 out of the 13 members of the commission knew nothing about it until the letter from Shaun McCarthy to my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell).”
“On corruption, Congress has repeatedly refused to take the steps that would not only mark the beginning of the end for corruption in India, but would reassure Indians, as well as foreign investors, that the Government are serious about tackling the problem. Anna Hazare and his supporters have been attacked. They have been deliberately frustrated and undermined by politicians from all parties.”
“It is not just market reform and liberalisation that hold India back. On a range of issues including the use of technology, agricultural productivity, education and the problem of corruption, India needs to do more. We know that India can transform sectors when it decides to. The infrastructure strategy for the current five-year plan is astonishing. The Government have predicted that $1 trillion will be spent on infrastructure over the next five years. That means billions of dollars of foreign investment that will revolutionise the infrastructure of the country and prepare it for its future needs in transport, energy and housing. It is just a shame that that bold vision is not repeated in other areas of the economy.”
“Perhaps the best example of India’s hesitance on market reforms, however, is the EU-India free trade agreement—the longest awaited free trade agreement in European history. Time and again, negotiators have made compromises and offers, only for the goalposts to be moved. Despite compromises on medical patents, immigration and other areas, the Indian Government seem as far away as ever from signing. India now insists that reforms in such areas as financial services and retail are for bilateral agreements, not EU-wide treaties. Those involved in the negotiations from an EU perspective have begun publicly doubting whether India wants to sign the treaty at all. The FTA exemplifies the failure of Indian leaders to grab the bull of reform by the horns, and drag India into the modern global economy.”
“In the retail banking sector, the largest foreign bank in India is limited to fewer than 100 branches, in a country with a population of more than 1 billion. It considers itself fortunate; the strict licensing laws have until now limited almost all other foreign banks to one branch in Mumbai. With liberalisation, the banking sector would pour tens of billions of dollars into India. In the legal sector, the limitations are even stronger. No foreign lawyer is allowed to practise in India. The Indian market is dominated by small-scale practices rife with corruption and inefficiency. Liberalising the legal sector would improve productivity, pull billions of dollars of foreign investment into the country and go a long way towards eliminating the graft that stagnates that legal system.”
“The Government also stood to gain by the move and would have expected to receive an additional income of $25 billion to $30 billion, by way of increased tax collection and reduction of tax slippages. That investment is not only on hold, but at permanent risk, as investors begin to question whether India will ever follow through its pledges on liberalisation. Retail is just one sector where foreign investors are begging for the reforms that will allow them to start pouring capital into the country. Last week I met representatives from the UK’s banking, accounting, insurance and legal sectors. They told me that they had been poised to invest heavily in India for decades, but their patience, too, is wearing thin.”