‘Everywhere I went in India,I saw tremendous growth. It didn’t feel like a 5 per cent growth’

Pranab Dhal Samanta: You say you found a great deal of optimism in India. What are your impressions—is there a gap between the way the government conveys a certain image or the way it functions and what you see on the ground?

Sir James Bevan: I have served in a lot of countries around the world. The city that Delhi most reminds me of is Washington DC. Washington DC is a place that runs America and Delhi,in many respects,runs India. Washington DC is a one-industry town—it does politics and it does politics extremely well. In Delhi,too,politics is what this town does. As they say in Washington,there is a difference between the way it feels when you are inside the Beltway from the way it feels outside the Beltway—like in the real America or the real India. I am not surprised about the difference. I have seen it elsewhere. The lesson for me is that India is not Delhi and Delhi is not India. Many of the major things that are going to affect India over the next 10-20 years are being decided outside Delhi,just as important decisions are being made in Delhi. It is important for me to see all of that.

SHubhajit Roy: What are the three things that concern you about UK-India relations?

Sir James Bevan: My main concern is that in the last several years,we have not managed to realise the potential that exists for a close relationship between India and the UK. I think we are making progress. On trade and investment,for example. Prosperity,jobs and growth matter most to our citizens. How do we generate that? Largely by increasing trade and investment between countries. That’s one of my major challenges. In 2011,our bilateral trade went up by 20 per cent over the previous year. There is very strong investment both ways between major British companies coming into India and major Indian companies coming into the UK. The second area where we can do more is in English and education. As I travelled around India,I was struck by the benefits that you get if you speak good English. As I went out into rural India,I was also struck by how so few people are able to speak good English and what an opportunity that is for us to co-operate. I think if our two countries literally speak the same language that will unlock tremendous benefits.

A third area would be security co-operation. Safety is increasingly about finding ways to combat terrorism,which threatens people on the streets of Delhi or Mumbai just as much as it threatens people on the streets of Manchester or London. One of the things that I am pleased about over the last couple of years is that we are starting to develop strong co-operation with Indian authorities in the area of counter-terrorism and other threats like cyber security.

Sunil Jain: How do you see the Rs 20,000 crore Vodafone case affecting India?

Sir James Bevan: Vodafone has invested something like seven billion dollars in India in the last five years. Vodafone has paid more than five billion dollars in taxes in India. So the idea that Vodafone is a tax dodger is wrong. Vodafone has created thousands of jobs for Indians and has helped improve the overall telecom network in India. So,Vodafone has done a lot of good for India and I think it is important that India encourages companies like Vodafone to come here and succeed.

Next is this question of retrospective legislation. When I talk to companies,and not just British companies but international companies and in particular Indian companies,they all say they want a stable ,transparent and predictable legal framework in which they know that if they have a dispute,they can get successful and rapid and conclusive redress. And I think that the risk of retrospective legislation is that it can undermine the confidence that an Indian or international company can have in that legal framework and we did see this. After the decision on retrospective legislation,India’s reputation did take a hit,not just in the UK but internationally. And I think that at a time when all of us want India’s economy to thrive and when more inward investment is part of the solution,I think that is something we need to reflect on.

Sunil Jain: A Reuters story had talked about how Vodafone was dodging taxes in the UK. Second,one of the big points that the Indian government has made is that the British government itself has done a lot of retrospective taxation.

Sir James Bevan: The basic point is that tax evasion is illegal,in India and the UK,and should be prosecuted. Tax avoidance is a greyer area. It is not illegal but it may not be right. We have had a big debate in the UK about tax avoidance—both by certain individuals and by companies. The government has said that it wants to take measures to close down opportunities for individuals or businesses to avoid significant amounts of tax where it was clearly the intention of the government that tax should be paid.

On the question of retrospective legislation,there have been cases in the UK and there have been cases in other countries where governments have passed retrospective legislation. The difference between what we have done in the UK and what has happened in India on Vodafone is about the scale. So,in the Vodafone case,the Supreme Court gave a very clear judgment that said Vodafone was not liable to pay tax on its transaction as the law stood in 2007,when the transaction took place. The government took a view that it would pass a legislation to overturn that judgment,which it is entirely entitled to do. But we cannot find a precedent around the world,including in the UK,where a considered judgment of the highest legal authority has been overturned by retrospective legislation.

Coomi Kapoor: In his recent book,Kuldip Nayar,India’s former High Commissioner to the UK,has strongly criticised the British government for sticking on with papers in its India Office Library. He said that they relate to the history of India,Pakistan and Bangladesh and it was the understanding that they would be handed over at the time of Independence. What do you have to say about that?

Sir James Bevan: I am not familiar with the issue but I understand why those papers are of huge importance to India,Pakistan and Bangladesh. Whatever the status of ownership,the British authorities would want to make sure that those papers are both properly preserved and made available to Indians and Pakistanis and others who want to have access to them.

Manu Pubby: Your company BAE tried to push for a 49 per cent FDI in defence,which was turned down by the government last year. Do you think that this cap on FDI is a problem for more investments?

Sir James Bevan: Defence is an important area for India and the UK. We have very good cooperation with India in terms of sales,in particular from companies like British Aerospace,and we are hopeful that that relationship will continue in the future. The nature of the relationship is rightly changing. It is becoming much more about India acquiring the expertise and capacity to build its own defence material,which is something we strongly support. FDI in general—whether you are talking about defence or multi-brand retail or anything else—is a good thing. We think it will have benefits for British and other international companies if they are able to come into India and take a larger stake in Indian companies. But the main benefit will be to the Indian people because extra investment helps create jobs,greater growth and greater wealth for the country. In the defence sector,we would like to see a raise in the current ceiling of 26 per cent. It’s for the Indian authorities to decide whether or when that happens and how that happens.

Pranab Dhal Samanta: Do you feel that the offset policy is acting as a deterrent for British and other international companies?

Sir James Bevan: We understand why the Indian government wants a greater offset. It wants to ensure that Indian workers and the Indian economy and industry benefit from these defence deals,including in terms of knowledge transfer. We support the principle of offset. The challenge is to make offset commercially attractive to foreign companies. That is a debate that India needs to have. I wouldn’t say the offset policy isn’t working. Why are British Aerospace and the other members of the Euro consortium interested in the jet fighter contract? Because we think that it offers significant commercial benefits for us as well as major offset benefits for India. So,I don’t see evidence yet that the offset policy is turning off potential bidders.

Manu Pubby: On the medium multi-role combat aircraft deal that India eventually signed with France’s Rafale,do you think Britain overreacted when Eurofighter lost the bid? Second,is Eurofighter still in the race?

Sir James Bevan: We don’t think Eurofighter has been eliminated from the competition. Several countries bid for this contract. The list of bidders was whittled down by the Indian authorities to two—Eurofighter and Rafale. The Indian authorities concluded in January that both these aircraft met India’s technical specifications and that Rafale offered the lowest over-all price. The decision the Indian authorities took was scrupulously in line with the process that they had laid out. Although we are disappointed,we have no complaints. What our Prime Minister has said is that we continue to think that overall,Eurofighter can offer India not just the best aircraft but the best package at the best price,including some very significant offset benefits for Indian industry. If the Indian authorities would like to have further conversations about the availability of the Eurofighters,we would be at their disposal.

Y P Rajesh: You mentioned about some Indian technologies that Britain would be interested in getting. What are those technologies?

Sir James Bevan: One of the lessons I have learnt in the few months that I have been here is that India is a world leader in a lot of areas. I have seen world-class technology,world-class business,world-class biotech,world-class education. With regard to defence technology,one of the things we do is that we have cooperation between our Defence Research Organisation and the DRDO here.

Sandeep Dwivedi : You took the Olympics to the east of London when you had the easier option of hosting it in central London. Also,is it unnerving to take the stage after the stunning show put up by Beijing?

Sir James Bevan: We are really looking forward to the Olympics. It was an important part of my government’s vision for the Olympics that it made life better afterwards. It wasn’t just about a month of sport. There are areas of East London that have traditionally been very deprived and that was the reason behind holding the Games there. We all saw China’s Games. They were a masterpiece in terms of how they were organised,in terms of the overall presentation. I don’t think we are going to emulate that. What we are going to do in London is offer a British version of the Games which may actually cost less,but we will make up for that in warmth. I am hoping this would be the warmest welcome that the world gets.

Dilip Bobb: What are the lessons from the Murdoch scandal?

Sir James Bevan: I think the key lesson is that the media and the government must not get too close to each other. The media’s ability to hold the government to account is a fundamental part of democracy in India and in the UK. We should protect and preserve that.

N P Singh: Britain has a coalition government after a long time. What are the lessons it is learning?

Sir James Bevan: This was the first coalition we had in Britain since the war. One of the things I am learning from it is that sometimes assumptions about coalitions can be wrong. One of my assumptions about coalitions was that they would be inherently weak,they would find it very hard to agree and they probably wouldn’t last for the five years of British parliament. I think I was wrong about all of those.

Shobhana Subramanian: In the Libor scandal,it is said that the Bank of England looked the other way and allowed Barclays to manipulate the rates. Your comments?

Sir James Bevan: We need to put into place new arrangements that make sure it never happens again. We need to ensure that our banking system has both integrity in the way it operates and has the confidence,not just of others in the financial world but the confidence of the international community and the British people. That confidence has been shaken and we need to restore it.

Ayesha Sareen (student,Hillwoods Academy): You have been a student of social anthropology. What are the social variations you noticed in the Indian and British cultures?

Indians and the British have a lot in common. We speak the same language,in some ways we think the same way. We have a similar sense of humour. What are the differences? The British are reserved,Indians are friendly. I learnt that on the train. I discovered that on an overnight train journey in India,you won’t get a lot of sleep,but you will make a lot of new friends. I like the fact that Indians are open and welcoming.

Jatin Sharma (student,Hillwoods Academy): Your MEA has suggested that people who are applying for visas to the UK will have to undergo a British history test. That’s something that worries me.

Sir James Bevan: We are not going to ask most applicants for the UK visa to pass a history test. Essentially,there are two questions we ask the applicant. One,if you are going to the UK,will you have sufficient money to support yourself so that you are not a drain on the British system? And the second question is,can we be assured that once you have visited the UK,you will come back to India? People who want to settle in the UK,who want to come and live as permanent residents in the UK,need to know something about the UK. You need to know how to speak reasonable English and you need to understand a bit about UK culture,and part of that is understanding a bit of UK history. I think that’s an entirely reasonable and legitimate approach to settlement.

Transcribed by Aditi Vatsa and Shalini Narayan