India's unpredictable and non-transparent business climate could derail the growth of trade ties between Britain and Asia's third largest economy, British Prime Minister David Cameron has warned his Indian counterpart.
Regulatory delays over London-listed Cairn Energy's $9.6 billion asset sale to Vedanta Resources, and legal wrangling over India's $2.6 billion Vodafone tax demand were raised by Cameron in the letter sent to Indian Prime Minister Manmohan Singh last month.
Cameron, who visited India last year intent on securing big-ticket business deals, is keen on fostering substantial trade ties with the emerging power to boost economic growth in Britain, still struggling from the effects of the global recession.
"Some UK companies still face difficulties, in particular linked to the predictability and transparency of the business environment in India," Cameron wrote, adding that hurdles "risk jeopardising our joint goal of a much stronger trade relationship".
An official at the British High Commission in New Delhi confirmed the contents of the letter, which was reported by the Hindustan Times newspaper on Monday.
Cairn agreed six months ago to sell up to 51 percent of its Indian assets to Vedanta, but the deal has been delayed by regulatory clearances and government foot-dragging over royalty payments.
India's oil minister said on Thursday that the cabinet could give its final decision on the deal this week.
"Cairn Energy faces unexpected regulatory hurdles which are causing delay and could block the deal entirely, which is very time-sensitive, thus preventing Cairn investors from legitimately exiting the market," Cameron wrote.
Britain is India's 12th biggest trade partner, with bilateral trade worth $12.5 billion in 2008-09. Britain is the fourth largest foreign direct investor in India, a former British colony.