Sir David Davis comments on treatment of British companies operating in India

As published by the Financial Times:

Boris Johnson is being urged by Conservative MPs to stand up for British companies operating in India at this week’s G7 summit and to warn Prime Minister Narendra Modi against making his country “a halfway house between democracy and despotism”.

Johnson has invited Modi as a guest to the G7 meeting as part of an attempt to involve other democracies, but India’s recent treatment of western investors, including Vodafone and Cairn Energy, has infuriated some Tory MPs.

David Davis, a former cabinet minister, said India was rightly seen as a strategic ally in the west’s campaign to contain China, but that the Indian government had “not committed itself to the path that the west would prefer”.

Davis, a longtime civil liberties campaigner, said India had kicked critics off social media platforms and he accused the country of seizing “by force the property of at least three American and British companies operating in India”.

“It’s time for Modi and his government to choose,” he said. “Does India’s future lie in committing to the western alliance of free democratic nations, or will he instead attempt some halfway house between democracy and despotism, between freedom and oppression, between the rule of law or the arbitrary whim of rulers, between the west and Chinese Communist party?”

Meanwhile, James Daly and Paul Bristow, Tory MPs and officers of the all-party parliamentary group on Kashmir, have written to Johnson urging him to raise with Modi his government’s supposedly “piratical” attitude towards foreign investors.

The Indian prime minister will attend the G7 summit, starting on Friday, virtually because of the severity of the Covid-19 outbreak in his country. The leaders of Australia, South Korea and South Africa have also been invited as guests.

The UK government has said it is not its policy to get involved in legal disputes of the kind involving Vodafone and Cairn Energy and New Delhi, and that Johnson was holding bilateral talks only with those leaders attending the summit in person.

The British prime minister is keen to strike a trade deal with India and was accused by the opposition Labour party of delaying putting India on a travel “red list” in April because he feared it would prevent his planned visit to the country. Johnson’s visit to India was eventually postponed.

Vodafone, one of Britain’s largest companies, entered the Indian market in 2007 but became embroiled in a complex dispute with the country’s tax authorities, which demanded €3bn in back payments.

Meanwhile, Edinburgh-based Cairn Energy launched legal proceedings against Air India in New York last month in an effort to enforce an international arbitration tribunal’s ruling that New Delhi should pay the company $1.2bn plus interest to settle its own historic tax dispute.

Devas, a satellite company based in India and the US, has also been dragged into a crippling legal dispute with Indian authorities over a 2005 contract with Antrix, the commercial arm of India’s space agency.

In their letter to Johnson, Daly and Bristow urged the prime minister to take a strong line with Modi: “Every step forward in UK-India economic relations is dependent on respect for the rule of law and protection of investors.

“This is the foundation that supports increased investment, standards recognition, technological co-operation and so much more. It provides certainty and predictability, which in turn unlocks investment and encourages risk-taking.”

The Indian government did not respond to requests for comment. But in May it said it was “vigorously defending its case” in the Cairn Energy dispute, including filing an appeal to have the arbitration award set aside.

One person with knowledge of the government’s thinking said it “strongly believes they haven’t done anything wrong”.

“The water is under the bridge with regard to these two cases,” he said. “The breadth and scope of our [India-UK] relationship are wider than these two companies.”