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British PM Cameron on India trade trip amid graft scandal

Mon, 18th Feb 2013 00:01

* Cameron makes second Indian visit as PM, Feb. 18-20

* Hopes India may consider Eurofighter if French deal fails

* EU states clamouring to boost trade relations with India

* Bribery scandal engulfs Anglo-Italian helicopter deal

By Andrew Osborn

LONDON, Feb 18 (Reuters) - British Prime Minister DavidCameron arrives in India on Monday to try to win new investmentin the face of fierce global competition as a scandal engulfs anAnglo-Italian helicopter deal.

Making his second visit to India as prime minister,Cameron's trip comes days after a similar trade mission byFrench President Francois Hollande, underlining how Europe'sdebt-stricken states are competing to tap into one of theworld's fastest-growing economies.

His delegation, which includes representatives of over 100companies, cultural and educational bodies, is the biggest takenabroad by a British prime minister and includes four ministersand nine lawmakers.

However, the timing of Cameron's trip is not ideal. Indiasaid on Friday it wanted to cancel a $750 million deal for adozen helicopters made by AgustaWestland, the Anglo-Italiansubsidiary of Italy's Finmeccanica, over briberyclaims.

That will not make Cameron's job of persuading India to buymore civil and military hardware easier, and Indian officialshave told the local press they intend to press Cameron for "afully fledged report" on what Britain knows about the scandal.

Britain has said it wants to wait until the end of theItalian investigation before commenting in full, but has givenIndia an interim report on the subject.

At a time when Britain's government is struggling to get itseconomy growing, officials see India, projected to become theworld's third largest economy by 2050, as a key strategicpartner in what Cameron has called a "Global Race".

"I think Britain and India can be one of the greatpartnerships of the 21st Century," he told the Hindustan Times."India is going to be one of the great success stories of thiscentury - a rising power in the world. And I want Britain to beone of your partners as you grow and succeed."

He is expected to remind the Indian government that theEurofighter jet - which is partly built in Britain - remains anattractive option if New Delhi decides to review a multi-billiondollar deal to buy 126 French-made Rafale fighters.

A British government source said on Friday that London hadnoted that Hollande had not finalised the Rafale fighter jetdeal during his own trip and that London would be asking how thetalks with the French were going.

Companies travelling with Cameron include BP, BAESystems, De La Rue, Diageo, EADS UK, HSBC, JCB,Lloyd's, the London Stock Exchange, London Underground,Rolls-Royce and Standard Chartered. He is alsotaking 30 small and medium-sized firms.

COLONIAL PAST

Cameron's visit to India, a country that won independencefrom Britain in 1947 and whose colonial history remains asensitive subject for many Indians, will take in Mumbai and NewDelhi.

Cameron says the two countries enjoy a "specialrelationship", a term usually reserved for Britain's ties withthe United States, but it is a relationship undergoing profoundchange. For now, Britain's economy is the sixth largest in theworld and India's the 10th. But India is forecast to overtakeits old colonial master in the decades ahead.

TATA group, an Indian company that owns car maker JaguarLand Rover, is now Britain's biggest employer in themanufacturing sector and, in a nod to how the relationship isevolving, London will stop giving India foreign aid after 2015.

Cameron is expected to lobby India to open up its economy toforeign investment to allow retailers, such as Britain's Tesco, to open outlets there amid frustration that many ofthe sectors in which British business excels remain partly orfully closed to foreign investors.

India is forecast to spend $1 trillion in the next fiveyears on infrastructure and Britain is hoping its firms may winsome of those contracts.

Some British companies have run into problems in the past.Mobile phone operator Vodafone has repeatedly clashed with theIndian authorities over taxes and oil company Royal Dutch/Shell has asked the British government to raise a tax disputeit has with India during Cameron's visit.

Cameron's aim is to double trade between the two nationsfrom 11.5 billion pounds in 2010, when he last visited, to 23billion pounds in 2015. Officials say that goal remains ontrack.

He is expected to meet Manmohan Singh, his Indiancounterpart, as well as President Pranab Mukherjee, and toannounce a clutch of deals, including cooperation agreements tohelp India develop its city metro systems.

His office said those deals would create 500 British jobsand safeguard a further 2,000. British firms were also winningcontracts in India, it said, saying the Intercontinental HotelGroup planned to build 13 new hotels in the next few years.

Another big trade mission in 2010 failed to yield the gainsCameron had hoped for.

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