The Government promote trade with both countries in a number of ways. I recently visited China and India to promote trade and I was accompanied by a business delegation on both occasions.
But does the Secretary of State agree that we are not doing well enough? The Minister for Trade told the House on
The answer is that we can always do better. It is worth bearing in mind that the UK is certainly the fourth largest investor in India, and may now be the biggest investor in India as a result of recent investments by Vodafone. The links between both India and China and the United Kingdom are good. We are building up trade in many areas, particularly in financial services and other service sectors. Both China and India are moving away from an interest in heavy manufacturing, in which countries such as Germany have traditionally done well in trade with them, into sectors such as services in which Britain has an outstanding reputation. Of course, in respect of both countries, we need to do better, which is why I visited them. There are good examples of additional investment. We want to encourage that two-way process.
Unlike Andrew Selous, may I praise the Government for their tremendous efforts to build relations with India? In my lifetime, I have known no other Government make such an effort. But does the Secretary of State recall the joint declaration signed by our Prime Minister and Mr. Manmohan Singh, the Indian Prime Minister, on
"establish a Ministerially-led Joint Economic and Trade Committee to further develop a strategic economic relationship between the two countries".
Can I therefore ask what progress has been—
If I might deal with the first part of my hon. Friend's question, praise for the Government is always welcomed and much appreciated. In relation to the second part, while people are sometimes understandably sceptical about the value of committees, especially those set up between Governments, the Indian one has actually been extremely productive. When I was in India in January, we made progress in four areas: Lloyd's of London will now be able to write reinsurance business in India; the Indian Government are now prepared to consider legislation that would allow Britain's big accountancy firms to set up and practise there; the Bar Association of India is now engaged in a way that will, I hope, lead to British law firms being able to practise in India; and Premier Oil has been given permission to begin production in the Ratna field. Such examples of engagement by the Government have made a difference.
In the medium and long term, the prospects for good trading relationships between India and Britain are exceptionally good, because both countries have the same outlook. The more that we foster that relationship and encourage investment into India, as well as Indian investment into this country, the better it will be for both our countries.
Given that the global business community is looking for investment wherever it is most effective, will the Secretary of State assure us that he is continuing talks with China and India about the science base and the growth of science and expertise in those two countries? If we cannot prevent companies from moving to those countries and investing in new research laboratories, we must collaborate with those countries in order to gain expertise back into this country.
The hon. Gentleman makes an exceptionally good point. A few moments ago, in reply to Andrew Selous, I said that I thought that both countries were reaching a stage at which they were taking a greater interest in services and in the non-traditional manufacturing industries such as pharmaceuticals, biosciences and so on. On my visit to India, I was particularly struck by the number of firms that want to work jointly with those in Britain. It is not a question of them coming here and taking over our companies; they value our science base and our ability to innovate, for which we have a worldwide reputation, and they want to ensure productive capacity in both the United Kingdom and India, to capitalise on the strength of both countries. We want to encourage that.
China, too, recognises that we have something that it currently does not have, and as huge structural changes take place in economies across the world, we can capitalise on that. That is why we will continue to invest heavily in science: this year we spent about £3.4 billion, which is double the sum invested 10 years ago.
Obviously, as a member of the Select Committee on Trade and Industry, I recognise the importance of the joint economic trade committee agreements with both India and China. Will the Secretary of State ensure that those JETCO agreements will lift the barriers that still exist to British exports to India? I am sure that he can do that. Will he also ensure that Typhoon will be part of the programme for India's purchases in the future?
I cannot ensure that the Indian Government will do any of those things because, at the end of the day, it is up to the Indian Government. However, they recognise they are reaching a stage at which unless they break down barriers to trade, India will lose out. That is especially important as we approach the conclusion of the world trade talks, at which India's position is pivotal. In the discussions that I have had with the Indian Trade Minister and those that my right hon. Friend the Chancellor has had with the Indian Prime Minister, we know that it is important to persuade all countries—India included—to do everything they can to break down trade barriers. They need British investment in financial services, the pharmaceutical industry and across the piece, including engineering. We want to encourage that and build on it.
Ten years ago, this country had a balance of trade surplus. Today, we are exporting 20 per cent. fewer goods to India than we were two years ago. Our balance of trade today stands at a whopping £56 billion deficit, the highest since 1697. Will the Minister tell us why that is?
If the hon. Gentleman wants to make comparisons with 10 years ago, he may recall that inflation then was in double figures, at 10 per cent. We have now had the longest period of low inflation since the 1960s. At one point, 3 million people were unemployed. Unemployment is now the lowest that it has been in the time that anyone can remember. National debt doubled under the Conservatives. Today, we have a very strong economic position.
In relation to trade, as I said, our position with India and China is strong and getting stronger. Most of that is built on the fact that we have an extremely strong British economy and, crucially, unlike the Conservatives, we are willing to put money into things like science and innovation, which is critical to our country's future.
May I join my hon. Friend Dr. Kumar in congratulating the Secretary of State on his very successful visit to India? May I also say that my right hon. Friend looked stunning with the garland that was placed around him on his arrival?
What practical steps will be developed as a result of the visit in terms of financial services, bearing in mind that both Mumbai and the City of London are key world financial centres?
I said that support for the Government is always welcome, and support for the Secretary of State is even more welcome, so I am grateful to my right hon. Friend for his compliments, if that is what they were. [Laughter.]
My right hon. Friend highlights an important area of future co-operation between Britain and India in relation to Mumbai. The Indian Government want to develop that city as a major financial services centre, not just for India, but for the region as a whole. We want to encourage that. The City of London is now able to open an office in Mumbai, and a lot of British companies are active there. We have been urging on the Indians a more liberal approach, allowing British firms to invest in Mumbai.
Some 23 Indian companies are listed on the London stock exchange and 13 are on the alternative investment market. That shows two things: first, the growing closeness and relationship between India and Britain, and, secondly, that the London stock exchange and the City of London are pre-eminent across the world and recognised as a very good place to do business. It is important that we keep it that way.