Trading places: why we must embrace regional differences in order to boost UK-India relations

When Anmol Sood first started looking at doing business in India nine years ago, prospects looked bright for Jaltek Group, his family’s diversified technology group based in the English town of Luton.

India’s central government was busy rolling out the digitisation of city infrastructure as part of a “smart cities” policy enacted in the wake of the tragic terrorist attacks in Mumbai. There was a real need for specialist technologies such as wireless transmission of data for CCTV cameras—exactly what Wavesight Ltd (one of the Jaltek group companies) specialised in.

Yet it took a couple of “false starts”, as Anmol, puts it, before things really took off. That’s because the company initially tried to run the business remotely from the UK. Pretty soon, he explains, it became clear that to be successful the company would have to set up operations in India.

Then came the real insight, says Anmol: “We appointed a new head of the business who had many years of experience selling into India. He quickly realised we had to work with national, state and local governments because a lot of the smart city policies were being handled differently, depending on what level you were interacting with. They had different needs and policies.”

Armed with this insight, Wavesight then made a concerted effort to develop relationships at all three administrative levels. And it has paid off: these conversations have resulted in orders from local authorities for new products like solar power for cameras, WiFi hotspot technology and heavy-duty computer tablets for police patrol vehicles, as well as requests to deploy the wireless transmission products across various states and with numerous customers.

Knowing your place: India

Wavesight’s experience highlights the importance of making the effort to really understand and navigate India’s many states and their varied administrative, legal and even cultural characteristics. Or, to put it another way: of knowing your place in India.

The country’s vast size is an obvious obstacle to any attempt to try and treat India as a single entity: its 1.3bn population is spread across a federation of 29 states, some as big and productive on their own as entire countries.  

What’s more, each has its own distinct dialects, cultures, histories, industries and business environments. By way of example, take Uttar Pradesh, a state in northern India and home to the Taj Mahal. It has a land area comparable to that of the UK, while Karnataka in southern India—famed for its high-tech megacity, Bengaluru—has a state economy comparable to that of Portugal.

“British companies do need to weigh up the relative merits of the different states in India,” says Kevin McCole, chief operating officer at the UK India Business Council (UKIBC), a London-based membership organisation that facilitates business connections between the countries. The UKIBC runs an annual survey tracking how India’s states rank in attractiveness to UK businesses, with Delhi, Maharashtra and Karnataka currently occupying the top places.  

Having this kind of knowledge is vital, because Indian states—as Wavesight discovered—have a significant influence on the business environment, with their own government, courts, taxes and regulation.   

A further factor is that Indian government reforms have put the onus on state governments to create conditions for business growth, with the emergence of “competitive federalism” between the states as they each strive to sharpen their attractiveness to inward investors.

JCB, the UK-based company specialising in manufacturing equipment, has invested over £250m in India since 1979 and in recent years has invested heavily in a plant in Jaipur, Rajasthan. The company has frequently cited the government reforms and opening-up of the business environment in Rajasthan as key reasons why it made this state a priority.

Knowing your place: UK

Knowing your place works the other way, too. Just as India can best be understood by examining its regional variations, so anyone looking at the UK can also benefit from taking a closer look at the country’s multi-faceted regions, especially at a time of political devolution and increasingly decentralised economic decision-making.

The British government has moved steadily down the devolution path initiated by the government of former prime minister Tony Blair. Progress has been most notable since the passage of the Local Government Act of 2000, which created a system of directly-elected city mayors with significant policy-making powers in relation to economic, social and environmental matters.

Probably the best-known regional development initiatives in the UK are the so-called “Northern Powerhouse” and the “Midlands Engine”. Both of these seek to re-invigorate the manufacturing and services potential of the two regions and the cities at their heart—Manchester, Sheffield and Birmingham—that have acted as powerful drivers of the UK economy for over two centuries.

Indian businesses are making the most of these regional strengths. Hero Cycles, India’s largest manufacturer of bicycles, invested more than £2m in moving its global design centre from India to Manchester in 2017.  Helping to drive the move was the fact that Manchester is home to the National Cycling Centre, and also plays a central role in the Northern Powerhouse agenda.

Devolved regional governments in the UK are also engaged in their own version of competitive federalism, with Scottish Development International and the Wales Trade and Investment each operating three offices in India.

There are frequent visits to the UK by representatives from Indian states, creating ample opportunities for UK businesses to take their first steps towards knowing their place in India. Kevin McCole of the UKIBC cautions that Indian states often tend to present themselves in much the same way as each other, with presentational material emphasising many of the same attributes when it comes to approvals processes, numbers of vocational educational institutes and so forth.

“They might appear on the surface to be similar,” McCole explains. “But when you start to drill down you’ll see some real sectoral strengths. So you have to make the extra effort to find out what’s going to be really differentiating.”

UK-India collaboration on regions

In tandem with the shift to what we might call a more “place-based” agenda in recent years, both the UK and Indian national governments have also been engaged in a move towards a more collaborative approach in a number of emerging sectors. You could say this is a case of UK devolution and Indian competitive federalism working together for an even greater goal.

In 2018, the UK and India agreed to forge a “tech partnership” that is pairing universities and businesses from different regions in the UK to states in India. The aim is to identify and link up businesses, venture capital investors, universities and other interested parties to provide access routes to markets for British and Indian entrepreneurs and small and medium-sized enterprises.

One element of this tech partnership is a link-up between the Midlands Engine and the state of Maharashtra, focused on the future of mobility, including low emission and autonomous vehicles, battery storage and the creation of lighter vehicles. Additional connections are being created with Bangalore, focused on augmented and virtual reality, advanced materials and artificial intelligence (AI).

City-to-city connections are also advancing apace. India has emerged as a priority market for Sheffield, as the city considers how best to forge profitable linkages globally in the wake of the UK’s exit from the EU. Sheffield City Region (SCR) recently commissioned the UKIBC—which is a key partner of PwC’s India Business Group—to conduct a location analysis and write a strategy for future collaboration.

The UKIBC’s investigations confirmed that one sector offering strong complementarity was advanced manufacturing, and that the city of Pune in Maharashtra provided good opportunities in this area. As a result, SCR is now developing a market entry plan to collaborate with Pune in a number of areas and hopes to develop a sustainable bilateral relationship with the city over the coming years.

Conclusion

Overall, the message is clear: place is key. The onus is now on Indian states and cities to step up to the challenge of creating the best possible conditions for UK businesses; on UK regions to escalate their strategies to unlock potential links with India; and on policymakers in both countries to help deliver the full benefits from partnerships between them. In each case, success will ensure that trade and investment between the two countries’ ‘places’ will generate rising opportunities for shared innovation, business growth and prosperity. In other words, a win-win on both sides.