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June 19, 1998


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Britain not to block investments in India

Britain will not stop aid to India as it is meant for basic human needs, but will join the United States and other nations in blocking loans to India from international financial institutions.

In an interview, his first to Indian media since the nuclear tests were conducted, Sir David Gore-Booth, British high commissioner in India, said, ''We will not be stopping the aid programme.''

Sir David denied reports from London that the British government had asked British firms to go slow on investments in India.

He said a number of measures had been taken by the British government to indicate its opposition to the Indian tests. A number of military visits in both directions had been postponed. ''We are unlikely to have any senior ministerial visitors for some time, and we are together with our international partners in deferring loans from international financial institutions, except those covering basic human needs.''

Sir David said the Indian economy was not doing well and he would have liked to see a radical programme of disinvestment in insurance and a ''radical attack'' on bureaucratic hurdles.

The high commissioner said there was no truth in reports that British officials had told businessmen who deal with India that they are not encouraging investment into the country . He, however, said that British companies have their own views about the state of the economy following the nuclear tests and the budget.

Sir David said they are free as they always have been to make their judgements about investing in India. The government will assist those which want to do business with India.

He said the Indo-British Partnership Initiative will remain and denied reports that it is finished. ''We are looking forward to the annual Confederation of Indian Industry delegation to London next month,'' he said.

Sir David said the nuclear tests by India and Pakistan have come as a great shock to his country and the international community in general. There are a number of reasons for this, he said. First, the tests have worsened India's security environment and not improved it. Secondly, India and Pakistan should be directing resources to health and education and welfare of the people rather than diverting resources to nuclear weapons and decreasing rather than increasing tensions between them. ''Thirdly we think the actions taken by India and Pakistan go against the tide of history,'' he said.

The high commissioner said the existing nuclear powers are working to reduce the holding of nuclear weapons and to work towards a nuclear free world, and ''it pains us to see that India and Pakistan are going in the opposite direction.''

''It also worries us that other countries may decide to go nuclear as well, thus threatening the security of the world'', Sir David said.

''Israel has the capability, Iran is seeking capability. North Korea may have the capability, and we think that this could snowball if it is not controlled.''

The British government has taken a number of steps as a measure of protest, he said. The British government has been party to the several declarations made by various international groupings. These are the European Union, P-5, United Nations Security Council and the Group of Eight. These communiques have set out the feelings of dismay and outrage and also the view that India and Pakistan should reengage with each other to reduce tensions in the subcontinent and to rejoin the mainstream of international community.

Asked whether investments to India were likely to slow down, Sir David said trade and investments take time. The G-8 communique by foreign ministers of eight major industrialised democracies and representatives of the European Commission on June 12 in London was the first blow to investor confidence. ''This will have a negative effect on investment,'' he said.

Sir David said trade will continue as usual with India. Existing investments would also be there. However, new investors would look at India carefully.

''Private business makes its own decisions. Private business would be looking at a nuclear subcontinent and would also be drawing its own conclusions about the budget and taken together, they may think there would be other places to put their investment.''

The Union budget for 1998-99 had a swadeshi tone and in this connection, Sir David referred to the countervailing duty of eight per cent which was late reduced to four per cent. ''But it was also vague on insurance and there were not really any measures to encourage foreign investment,'' he said. He hoped for more on disinvestment of public sector undertakings.

''I would like to see sector undertakings radical programme of disinvestment, a radical opening up of the insurance sector and a radical attack on bureaucratic obstructions,'' Sir David said. This will help to bring more foreign investment into the country, he said.

Asked whether the NRI package announced by Finance Minister Yashwant Sinha in his budget speech would bring NRI investment into India, Sir David said, ''To me it looks like a half measure.''

''I doubt if NRIs look at the potential of the market in any way different from other foreign investors. It is not a question of giving the Person of Indian Origin card, it is a question of putting funds in India,'' he said.

Sir David said he did not think that there were any immediate prospects of the United States withdrawing the sanctions even if its business interests were hurt.

He said these sanctions have been made through a legislation and they can be removed by affirmative resolution in both houses of Congress.

Sir David said British citizens were angry with India conducting nuclear tests. British people have a long history of concern about nuclear weapons. There is a very major campaign in the United Kingdom on nuclear disarmament called the CND, he said.

''So there is a strong feeling among the British people that nuclear weapons must not be used, and people in Britain want India and Pakistan not to use these,'' he said.

Sir David said what the British people would like to see is a solution to the problems which divide India and Pakistan.


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