India and the UK should build on their affinities

Written by Ivor Vaz | Updated: May 1 2010, 04:22am hrs
Sir Michael Snyder, Senior Partner, Kingston Smith one of UKs fastest-growing chartered accounting firmswas in India recently. In a freewheeling conversation with Ivor Vaz, he talks about the need for the UK and India to engage in business, and the huge potential for bilateral trade.

You have been a member of the Court of Common Council of the City of London Corporation, and served as chairman of its Policy and Resources Committee. How important was it to engage with the emerging economies like India

As a leader, I felt it was very important for London, which is the worlds leading international financial centre, to engage with those economies that are likely to be the leaders of the future, namely India and China. Therefore, we decided we couldnt be just an ivory tower in the city; rather we needed to demonstrate our involvement with India and so we opened an office in Mumbai.

This comes out of my belief that India and the UK need to engage together. I believe we need to do this for lot many reasons but mainly because we have a great affinity of culture, of language and of history. Moreover, theres an enormous Indian population in the UK and a lot of Brits over in India. Therefore, it would be very beneficial to fuel this relationship.

How seriously do you view India as a trading partner of the UK

I think India and the UK are very similar, though from different perspectives. The UK has always been a trading nation over the centuries and so has been India. I found out just recently that if you go back in time, India had 33% of the worlds trade. Thats down to about 4% at the moment.

So theres plenty of scope for it to increase again. The point Im making here is that India has got vibrancy. Theres a great energy and entrepreneurial culture in India. With its growing middle class, India should overtake China in 2022-25 as an economic powerhouse. Of course, theres infrastructure and other issues to overcome. Nevertheless, there is incredible potential.

Do you foresee more opportunities for British companies to invest in India

There have been great opportunities in the past for British companies to invest in India and I think now the greater interest is because weve had 15% compound growth over 15 years. And weve got no reason to believe that the next 10 or 15 years will be any different. I think whats much more interesting for the UK is investments in India at the moment, because of the growth rates and the likely future growth rates. Investments in the developed world are relatively unexciting. There is an increasing need to look at more interesting, exciting higher returnsnot necessarily higher risk.

What about Indian investment in the UK

Indian companies must look to coming to the UK, as regulations here ease their ability to do foreign direct investment. Of course, great entrepreneurs that Indians are, they are naturally going to come to the UK, because of all the aforementionedlanguage, culture, cosmopolitan society and right time-zone, and the access you get to the EU markets. While America is a popular destination in terms of academic institutions, there are a lot more barriers to entry as compared to the UK and its an inward-looking society as compared to the UK.

Your connections with India run deep. Tell us about them.

My connectionsand Kingston Smiths connectionswith India go back a long way. A good business is all about building relationships. And we are very serious about our relationships with India and with Indian businesses. We have a critical mass of Indian business in the UK. We act for a sizeable number of fairly large Indian companies in the UK, including Reliance, Tata, Ranbaxy and Infosys. We are also the founding member of KS International, an association of over 100 independent accounting firms in 49 countries around the world.

What are the biggest hurdles for Indian companies setting up base in the UK

That depends on what kind of business they are into. If theyre a financial services business, theres a whole range of financial authorities and regulations to go through. If theyre a bank, theres the Bank of Englandequivalent to the Reserve Bank of Indiato go through. If its a retail business, I would advise a lot of caution because they will need a lot of market research, a lot of interaction and an understanding of how someone sets up a retail business in the UK. We can help with getting some of those connections made. If it is a film or TV production, we also have the connections to help them make a good start. But first, youve got to get the tax structure right, the right HR system, the contracts of employment, etc. We have a specialist arm of HR that deals with this for our clients.