The UK and India have agreed to strengthen ties on defence, anti-terror tactics and dealing with climate change, and have announced £9bn of deals focusing on energy and finance to coincide with the London visit of Indian Prime Minister Narendra Modi.
The two governments said they would “elevate their defence relationship” with more joint military exercises and co-operation on technology and defence manufacturing, although an expected deal for BAE Systems to sell India a further 20 Hawk trainer aircraft to be assembled in Bangalore did not immediately materialise.
As with the recent UK visit of Chinese President Xi Jinping and its promise of £40bn of trade and investment deals, business executives questioned how much of the £9bn announced during Mr Modi’s trip was really new and how much would eventually be realised.
Lightsource Renewable Energy Holdings will invest £2bn in designing, installing and managing 3GW of solar power equipment in India over the next five years, to create 300 jobs in Britain and £42m in revenue.
Lightsource has signed a memorandum of understanding with India’s Srei Infrastructure Finance, and joins other foreign and local investors hoping to profit from India’s ambitious $100bn plan to raise the country’s solar capacity from about 4GW today to 100GW by 2022.
OPG Power Ventures, another British company, is to invest £2.9bn in launching 1GW of solar power and a further 3.2GW of other generation capacity, including traditional thermal power stations, in the southern state of Tamil Nadu.
Among other investments, the UK’s Vodafone will invest £300m in technology centres for its international operations in Pune and Ahmedabad, as well as a further £800m on expanding and upgrading its Indian mobile telephone network. These investments are seen as a significant vote of confidence in India not because of their size but because Vodafone is still locked in combat with tax authorities over a controversial demand for $2.6bn in back tax under a retroactive law introduced by Mr Modi’s predecessors.
The City of London featured prominently in Mr Modi’s trip, and George Osborne, the UK Chancellor, welcomed the forthcoming launch by the Indian railway network of a quasi-sovereign rupee bond — a so-called “masala bond” — in London.
Other bonds unveiled include the first private sector masala bond by HDFC, the bank, for up to $750m in rupees, a sterling bond for some £500m from Bharti Airtel, the telecoms group, and a dollar denominated green bond issue worth $500m from Yes Bank. Mr Osborne said the announcements “put Britain’s financial markets at the heart of funding India’s rapidly growing economy”.
In a speech at the Guildhall in the heart of the City on Thursday night, Mr Modi urged British investors to take advantage of big opportunities in everything from railways to information technology. “We are open to carry out necessary corrections in our policies and procedures,” he said. “I assure you of my personal care in making your dreams a reality.”