David Cameron's message to India: 'We're open for business'

Indian business leaders expected to demand reform to visa rules hindering trade with Britain

David Cameron and Manmohan Singh, the prime minister of India (EPA;PA)

David Cameron – caught in the middle of a heated debate over immigration - will arrive in India next week with a message that Britain is "open for business". But he will be confronted by Indian business leaders urging him to reform visa rules they say are hindering trade between the two countries.

Mr Cameron will visit Mumbai and Delhi over three days to underscore the importance of what he believes will be one of the “most important relationships of the 21st century”. Officials say the two nations are on track to meet the undertaking to double bilateral trade by 2015, made on Mr Cameron’s first visit as Prime Minister in 2010.

Although Mr Cameron will be accompanied by a big delegation of British businessmen, there has been little anticipation in India that his visit will coincide with the announcement of any big ticket deals. As it is, he is following days after a visit by Francois Hollande, the French President, who held talks about new arms deals and further cooperation on nuclear energy.

French firm Dassault Aviation has emerged as the lowest bidder for a £6.3bn contract to supply India with 126 jet fighters, one of the world’s biggest defence deals. This is big setback for the rival Eurofighter Typhoon.

A Downing Street official said yesterday: “We respect the fact that the Indians have chosen their preferred bidder and are currently negotiating with the French. Of course, we will continue to promote Eurofighter as a great fast jet not just in India but around the world.”

A government source added: “Hollande was in India this week and a deal has not been signed so we will want to find out from the Indians how their talks are progressing with the French.”

Although trade is reportedly growing by around 23 per cent and India has become the fifth largest investor in the UK, many believe the relationship could be considerably better. Among EU nations, the UK is in third place for total trade with India, some way behind Germany and a little behind Belgium.

“I think there is a deeper emotional relationship between India and Britain, than India has with France. But there is a lot of potential that is not met between the two countries,” said RK Kanoria, chairman of Kanoria Chemicals and Industries and a former president of the Federation of Indian Chambers of Commerce and Industry.

Mr Kanoria said getting visas for businessmen and women wanting to visit the UK was “a hassle” though he believed most ultimately obtained one. “Britain needs to find a way of getting a fast-track for the genuine business people,” he said.

Others are more critical. Sanjaya Baru, a former media director for Manmohan Singh, the Indian Prime Minister, and now a strategic analyst, said getting a UK visa was more difficult than for the 25 European countries in the “open borders” Schengen Agreement or the US. He said the UK Border Agency demanded “too many documents” and the process was intimidatory and very expensive. “The first thing he should do is simplify the process,” said Mr Baru.

Mr Cameron will brief his Indian counterpart on his recent joint talks with Pakistani and Afghan leaders and they will also discuss closer co-operation on intelligence.

The debate over Britain’s immigration rules has divided the Cabinet. Vince Cable, the Liberal Democrat Business Secretary, believes they deter entrepreneurs and students, but has clashed with Theresa May, the Home Secretary, who is trying to meet the Conservatives’ pledge to cut net migration to under 100,000 a year by 2015.

British officials in Delhi said that while there was a 23 per cent drop in the total student visas issued last year, this was from a spike in 2009. “In 2012, 80 per cent of Indian students who who applied for a visa received one,” said an official. Indian students can work for three years after completing their studies if they obtain a “graduate-level job”.

In advance of his visit, Mr Cameron gave interviews to Asian television channels in which he admitted Britain had failed to make clear its position on visas. But many say the Government has been sending mixed messages.

Rajesh Agrawal moved form Indore to London 11 years ago with just £200 pounds. He now heads his own business, a foreign currency exchange firm, that employs around 70 people. “Had the current immigration rules been in place when I moved, I would not have been able to come here,” he said.

Mr Agrawal’s message to Mr Cameron was to ease restrictions, lower taxes on plane tickets – “we are an island” – and stop sending conflicting messages. “The message I keep hearing from people in India is that Britain is closed to business, that it does not want foreign students and international businessman,” he said.

At the moment, Britain receives more investment from India than the rest of the EU nations combined. However, business leaders are likely to ask British officials the ramifications for Mr Cameron’s pledge to call an in/out referendum on EU membership by 2017. If Britain left the EU, it could no longer boast of being a “jumping off point” to Europe.

Among Britain’s requests to India will be a settlement of the Vodaphone tax row, a £2bn tax dispute that has now simmered for several years.