UK employers warned to stop looking at India just for low-cost labour

UK employers are falling behind the US, Europe and the Far East in the race to invest in India’s fast-growing economy, according to a government report.

The report by the trade and industry committee concludes that the UK’s unique relationship with India should be generating a much higher level of trade and investment than is actually the case.

MPs found that UK firms have only a partial understanding of the Indian economy despite it becoming the fourth largest economy in the world with the second largest population of 1.1billion.

Their report says that many UK companies view India merely as a source of low-cost labour rather than as an emerging market in its own right.

The MPs are concerned that “the UK’s perception of India has been seriously distorted by the media’s focus on the perceived threat to UK jobs from outsourcing, particularly call centres, creating a view that these centres are the dominant feature of the Indian economy”.

The committee’s report encourages UK companies to become more vigilant if they are to take full advantage of India’s fast liberalising economy.

Committee chairman Peter Luff said: “Levels of interest in the Indian economy are growing year on year – but UK investors don’t yet really understand the opportunities that India presents.

“If we are to take full advantage of this golden opportunity, UK firms must reassess their perception of the Indian economy as simply a source of low-cost labour and the UK government must do more to help them.”

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