James Crabtree moved to Mumbai in 2012 to lead The Financial Times coverage of corporate India. He has previously worked as a journalist and policy wonk in both the UK and US, and was educated at Harvard and the London School of Economics.
LONDON – INDIA: THE PECULIAR RELATIONSHIP
More than half a million people of Indian descent live in London, but few of them illustrate the oddities of the city’s ties to India as clearly as the Hinduja family. Led by four brothers, their business empire stretches from truck manufacturing to technology outsourcing, with revenues of around $25bn. Although viewed as Indian tycoons, only one brother – Ashok, the youngest – is actually based there, and the country amounts to barely more than a tenth of their turnover. The two eldest – Srichand and Gopichand – have lived in London for decades, where their operations as a whole are now headquartered. Plenty of Hinduja companies are based in Britain, including vehicle maker Optare, which last year delivered London’s first fully electric buses. The family even upped their investments in the capital last year, buying the old War Office buildings in Whitehall, which they plan to redevelop.
At a recent meeting with a handful of journalists in Mumbai, Gopichand – an avuncular figure, generally known as ‘GP’, who happened to be in town for a lavish family wedding – talked fondly about his adopted city. Tax treatment for foreigners was better than in India, he said, while complaining about India’s restrictions on non-resident investors, and gossiping freely about his easy access to Downing Street. No wonder, given London has clearly been good for the family: Gopichand and his elder sibling Srichand – or ‘SP’ – took top spot on last year’s Sunday Times rich list, with a fortune of £11.9bn. Fittingly, they also own one of the capital’s most expensive homes: a series of mansions on Carlton House Terrace, which they knocked together to create one palatial and extraordinarily expensive residence.
Yet rather than being welcomed by Londoners as foreign wealth-creators, the Hindujas have also come to embody something more questionable about the capital, and perhaps the nature of its developing ties to India too. The Hinduja’s successes seem to underline London’s image as a bolt hole for super-wealthy foreigners – a pattern commonly associated with Russian oligarchs but equally applicable to India’s ‘Bollygarchs’, as its industrial tycoons are sometimes known.
For London, this creates a conundrum. The coming global era will be defined as much by ties between the world’s great cities as between states. There is obvious potential for the axis between London and Mumbai, or London and Delhi, to embody this century just as links between London and New York or Los Angeles were perceived to dominate the last. Yet the relationships between London and its Indian counterparts often seems half-formed and under-developed, lacking institutional coherence or political cooperation. The result is a bifurcation, in which London relies on low-level bonds that are essentially accidental – the lucky result of a previous generation’s immigration choices – on the one hand, or ties between a smaller number of plutocrats on the other.
The coming global era will be defined as much by ties between the world’s great cities as between states
On the latter front, it is undeniable that, within India’s upper strata, London is seen as a playground. Many move permanently, including billionaire steel tycoon Lakshmi Mittal and mining baron Anil Agarwal. It is almost taken as axiomatic that the country’s business and media elites flee their country’s torrid summer, making an annual trek to those 21st century hill stations of Chelsea and Notting Hill. London makes a reliable destination for Indian property speculation too, with second homes acting as a hedge against the depredations of the rupee. Some Indians even joke that all this ruins their enjoyment of the city. ‘There was a time when Indians were ashamed of being Indians, but that isn’t true any more, there is now a lot of confidence, and this shows in the way these rich, crass Indians behave in London,’ says Suhel Seth, a flamboyant marketing guru, who himself spends much of the year hobnobbing in the city’s finer haunts. ‘We are in danger of turning London into a mini India, and ruining something special about the city.’
This is an exaggeration, of course. The flight routes between Heathrow, Delhi and Mumbai are already among India’s busiest, and only a fraction of those passengers are top 1% types. Indians are London’s largest non-white ethnic minority. Elite London universities throng with Indian students. Bollywood directors seek out London locations. Indian DJs thrive in the city’s club scenes. London is at once global and familiar: English speaking, open and cosmopolitan; an aspirational brand in a country with a fast-developing consumer culture. Take that together, and it adds up to something Mr Seth describes as India’s ‘deep cultural affinity’ with the city. Singapore and Dubai offer regional competition, but there seems little danger that another European city is likely to replace London as the global metropolis to which Indians look to do business or enjoy themselves.
That cultural affinity can be a source of obvious economic opportunity. Last year I met Abhishek Lodha, the eldest son in the Lodha family, who run one of India’s largest property companies, and plans to funnel $5bn into London property over the next few years. The venture would succeed, he explained, because he knew the city so well as a visitor, while Indians would be especially keen to invest in Lodha branded developments in London. A similar relationship even seems to works the other way round, given that Britain has generally been India’s largest foreign investor, ploughing in $21bn since 2000, much more than any other country.
Even so, London’s attempts to develop deeper ties with India have been patchy. The capital has attracted prominent tycoons, but not their investments. Led by the Tata conglomerate, large Indian companies rushed to go global over the last decade, snapping up assets across the industrial world. But while Tata now owns a hotel in London, their biggest British deals involved acquisitions outside the city, such as Jaguar Land Rover and Tetley Tea. Hopes that London would become a source of capital for Indian companies have foundered too, albeit often for good reasons. Businesses like Vedanta and Essar Energy have floated on the London Stock Exchange over recent years, but attracted criticism for opaque governance. Few others have followed them, often to the quiet relief of City grandees. In return, London based financial institutions have failed to crack India’s potentially vast market. British banks like RBS and Barclays retrenched after the financial crisis, curbing back their Indian operations. Strict regulations keep London-based players out of Indian sectors like legal services and insurance.
When India needs capital, neither London’s financial institutions nor its government seem able to deliver
In theory, London’s place as a centre for services and a hub for ideas should provide the ideal basis for improved Indian ties, an argument floated by former Conservative minister David Willetts when he accompanied David Cameron to Mumbai in 2013. ‘London is the world’s greatest centre for the master planning of cities and industrial zones, with expertise in transport systems, structural engineering and architecture,’ he said. The city’s early experience with urbanisation could provide a model for everything from public transport to sewerage, he claimed, as India grapples with a coming era mass urbanisation. But here too the reality has been less heartening. During his visit, Mr Cameron trumpeted plans for a British-backed industrial corridor between Mumbai and Bangalore, involving investments north of $20bn. Yet while a similar Japanese-backed project between Mumbai and Delhi has attracted billions of dollars, the British endeavour struggled to raise enough for a scoping project. When India needs capital, neither London’s financial institutions nor its government seem able to deliver. And similar unfilled opportunities can be found in other areas too. Britain’s habit of tightening of visa regimes deters students and irks business visitors. Bangalore’s e-commerce scene is humming, but there are few links with London’s Silicon Roundabout. Indian tie-ups from London’s greatest institutions – the Royal Opera House, for instance, or the Tate – are often far from obvious.
What might be done about all of this is not obvious, however. Many of these problems could fall away in future, as India opens up industries like insurance to foreign competition, or Indian businesses begin hunting abroad for capital once again. Relationships between cities are also organic things, not always amenable to the designs of their governments. Mayor Boris Johnson did make an early stab at a more strategic approach to London’s links with India, during his own visit to the country in 2012. But it isn’t clear that much has changed since then, either in understanding those ties or thinking about how to build on them. If London aims to be India’s global city of choice, it at least has a head start. But over the coming decades, India’s gaze may shift – toward regional financial centres like Singapore, export markets in Africa, or mega cities in fellow emerging giants like China. London will have to work harder to hold it.