LONDON (Reuters) - British Prime Minister David Cameron arrives in India on Monday to try to win new investment in the face of fierce global competition as a scandal engulfs an Anglo-Italian helicopter deal.
Making his second visit to India as prime minister, Cameron’s trip comes days after a similar trade mission by French President Francois Hollande, underlining how Europe’s debt-stricken states are competing to tap into one of the world’s fastest-growing economies.
His delegation, which includes representatives of over 100 companies, cultural and educational bodies, is the biggest taken abroad by a British prime minister and includes four ministers and nine lawmakers.
However, the timing of Cameron’s trip is not ideal. India said on Friday it wanted to cancel a $750 million deal for a dozen helicopters made by AgustaWestland, the Anglo-Italian subsidiary of Italy’s Finmeccanica, over bribery claims.
That will not make Cameron’s job of persuading India to buy more civil and military hardware easier, and Indian officials have told the local press they intend to press Cameron for “a fully fledged report” on what Britain knows about the scandal.
Britain has said it wants to wait until the end of the Italian investigation before commenting in full, but has given India an interim report on the subject.
At a time when Britain’s government is struggling to get its economy growing, officials see India, projected to become the world’s third largest economy by 2050, as a key strategic partner in what Cameron has called a “Global Race”.
“I think Britain and India can be one of the great partnerships of the 21st Century,” he told the Hindustan Times. “India is going to be one of the great success stories of this century - a rising power in the world. And I want Britain to be one of your partners as you grow and succeed.”
He is expected to remind the Indian government that the Eurofighter jet - which is partly built in Britain - remains an attractive option if New Delhi decides to review a multi-billion dollar deal to buy 126 French-made Rafale fighters.
A British government source said on Friday that London had noted that Hollande had not finalized the Rafale fighter jet deal during his own trip and that London would be asking how the talks with the French were going.
Companies travelling with Cameron include BP, BAE Systems, De La Rue, Diageo, EADS UK, HSBC, JCB, Lloyd‘s, the London Stock Exchange, London Underground, Rolls-Royce and Standard Chartered. He is also taking 30 small and medium-sized firms.
Cameron’s visit to India, a country that won independence from Britain in 1947 and whose colonial history remains a sensitive subject for many Indians, will take in Mumbai and New Delhi.
Cameron says the two countries enjoy a “special relationship”, a term usually reserved for Britain’s ties with the United States, but it is a relationship undergoing profound change. For now, Britain’s economy is the sixth largest in the world and India’s the 10th. But India is forecast to overtake its old colonial master in the decades ahead.
TATA group, an Indian company that owns car maker Jaguar Land Rover, is now Britain’s biggest employer in the manufacturing sector and, in a nod to how the relationship is evolving, London will stop giving India foreign aid after 2015.
Cameron is expected to lobby India to open up its economy to foreign investment to allow retailers, such as Britain’s Tesco, to open outlets there amid frustration that many of the sectors in which British business excels remain partly or fully closed to foreign investors.
India is forecast to spend $1 trillion in the next five years on infrastructure and Britain is hoping its firms may win some of those contracts.
Some British companies have run into problems in the past. Mobile phone operator Vodafone has repeatedly clashed with the Indian authorities over taxes and oil company Royal Dutch/Shell has asked the British government to raise a tax dispute it has with India during Cameron’s visit.
Cameron’s aim is to double trade between the two nations from 11.5 billion pounds in 2010, when he last visited, to 23 billion pounds in 2015. Officials say that goal remains on track.
He is expected to meet Manmohan Singh, his Indian counterpart, as well as President Pranab Mukherjee, and to announce a clutch of deals, including cooperation agreements to help India develop its city metro systems.
His office said those deals would create 500 British jobs and safeguard a further 2,000. British firms were also winning contracts in India, it said, saying the Intercontinental Hotel Group planned to build 13 new hotels in the next few years.
Another big trade mission in 2010 failed to yield the gains Cameron had hoped for.
Editing by Rosalind Russell