Concerns are growing in London that Modi’s India may not be a reliable partner as the U.K. and India move closer to a free trade deal, writes Tim Worstall, a senior fellow at the Adam Smith Institute in London in City AM.
Worstall writes that, “India is not a natural partner in free trade. Its morass of regulations, barriers, and taxes make market access extremely difficult. The Modi Government’s watering-down of legal safeguards for foreign investors and disregard for legal judgments, adds to the concerns for British businesses.”
The Devas case is an instructive warning for any investor in Britain, or around the world, who is considering risking their money in Modi’s India.
Worstall writes that, “Indo-American satellite firm Devas Multimedia has also been granted compensation north of £1bn to be paid by the Indian Government, which the Indian government is still appealing. The company’s contract was cancelled arbitrarily, after Devas had invested tens of millions in preparatory work; three separate arbitration rulings confirmed the Indian Government acted illegally.”
India’s actions in the Devas case – and in linked cases, such as Cairn Energy and Vodafone – signal India is an unsafe place to invest. Its refusal to abide by international agreements and arbitration decisions will have long-term consequences for the economy, especially as it seeks to recover from COVID.
Former U.K. Minister and MP David Davis recently told the Financial Times, “The Indian government’s willingness to ignore court rulings will only damage its own national interest.”
This warning has been echoed by other British business leaders such as former Director-General of the British Chambers of Commerce, John Longworth, who wrote in the Telegraph that “Recent experience gives us pause for thought on this score with the Indian authorities apparently backsliding from these high standards, court judgments being ignored when unfavourable to the government, and international treaties broken.”
In conclusion, Tim Worstall shares these calls for closer scrutiny of India’s appalling track record on investor protection. His oped assesses that “Any potential British investor looking at these cases will think: ‘that could be me’. Without guarantees of legal protections, the government’s aim to double annual trade to £50bn is unlikely to be achieved.”
This lesson applies not just to the U.K., but equally to investors from across the Western world: American companies such as Amazon have been also targeted. During the COVID pandemic, the Modi regime displayed its latent authoritarianism by threatening two of the world’s largest tech companies, Twitter and Facebook.
This anti-investor approach has a real-world impact: before the COVID-19 pandemic, the Indian economy had sunk to its lowest ebb in over 40 years. This is the result of policies that are anti-investor, anti-rule of law, and pro-corruption.
Read more here.