I'm glad to see today such an impressive turnout of both British and Indian companies and so many representatives of key Indian business organisations at this Indo-British Partnership Summit.

I pay especial tribute to both Narayana Murthy and David Jefferies, Co-Chairmen of the Partnership which has proved such a success over the last nine years.

But the partnership between our nations goes much further than that. It has strong roots in a long shared history. You can see that history every day on the streets of both modern India and modern Britain.

Combating Terrorism Together
Today, as well as our business and trade links, we are joining together in the fight against terrorism. I want to express our total solidarity with you in the face of recent terrorist outrages in India.

There can be no room in any civilised society for organisations such as Lashkar e Toiba and Jaish Mohammed - groups banned by the British government some time ago. The appalling attacks on India's Parliament of 13 December and on the Jammu and Kashmir Assembly on 1 October demonstrate more clearly than ever the threat such fanatics pose not just to your democracy, but to all democracies - and to civilised values in the whole world.

Of course, people are entitled to pursue their political views by legitimate means. But the indiscriminate and deliberate murder of civilians to cause chaos and mutilation defiles any political cause.

The September 11 attacks in America have changed attitudes towards terrorism. The action against the Al Qaida network in Afghanistan has shown international determination.

Al-Qaida failed in their effort to break the West and its economies. They are now themselves broken in Afghanistan.

Britain's Role Since 11 September
I am very proud of the role that Britain has played since September 11. Diplomatically, in the UN, and in the alliances we have built to good effect as we have sought to maintain and strengthen the international case against terrorism. On the humanitarian front, where our own Department for International Development has a deservedly high reputation, and where Governments and aid agencies have frankly exceeded all expectations in the help they have managed to get to those who need it most inside Afghanistan. And of course militarily, where Britain has played its part both in offensive operations against the Taliban and the Al Qaida network, and where we now lead the International Security Assistance Force helping the new interim administration in Kabul.

I am proud of our role not just because it is the right thing to do, and because we have been able to make a contribution, but also because in today's globally inter-dependent world, foreign policy and domestic policy are part of the same thing. Dealing with international terrorism abroad is not just right in itself. It is vital to our economy, our jobs, our stability and security.

Of course, there is much focus at the moment on the issue of Kashmir and the acts of terrorism connected with it. This will feature heavily in my discussions over the coming days here and in Pakistan. But one thing is clear. Only politics not terror can solve issues like this. And the starting point of any dialogue must be the total and absolute rejection of actions such as those of 1 October and 13 December. I view an attack on your Parliament with every bit as much outrage as I would an attack on the Parliament in which I sit. It was an attack on democracy itself. Terrorism is terrorism wherever it occurs, whoever are its victims.

Today, inevitably, I speak against the background of September 11 and the tension here in this sub-continent. But I want to set even these events in a wider context: how Britain and India work together, with others, to confront terrorism; but also how we build support for the policies and values that promote peace and justice and mitigate against extremism and terror, in all nations everywhere.

For terrorism is not new. Fanaticism is not new. What is new is the combination of terrorism, fanaticism and the technological capability to wreak vast and inhumane devastation, whether by acts of terror, weapons of mass destruction, or other means. And even without either the terrorist or the fanatic, the challenges we face of environmental degradation, poverty and the uneven spread of globalisation are more than enough to occupy us.

The dangers are clear. Sometimes the opportunities are less so. Yet the possibilities of technological and scientific advance, particularly now in the new field of genetics, are immense. And the world has recovered from its 20th century infatuation with fundamentalist political ideology, though religious fundamentalism remains a potent threat.

The Basic Rules
For most politicians, ready to listen and learn from an analysis of the developments of the last few years, the basic rules of what works and what doesn't, what advances a nation and what holds it back, are increasing plain.

In any country I visit, from the mighty USA to still impoverished Bangladesh, the basic rules are there to be followed. It's not always easy to follow them, of course; but it is relatively easy to discern them. Let me set them out; and then let us see how Britain and India can work jointly to help achieve them.

First, any successful economy needs to conform to certain basics. It should be an open economy, willing to let capital and goods move freely. It needs financial and monetary discipline - the markets and investors swiftly punish the profligate. It needs to encourage business and enterprise - to create an enabling climate for entrepreneurs. A few years ago, people might have stopped there. But now we can add confidently: the successful economy also must invest heavily in human capital, technology and infrastructure. Education is a top economic as well as social priority. High levels of unemployment and social exclusion do not just disfigure society, they waste the national resource of human talent. That is why both Britain and India place such emphasis on it today, backed by businesses that know that without the skills, the economy cannot progress. This is the role of the enabling state. These rules are tough though. They require nations to open markets and that can be painful. And they require political leaders to fund investment where benefits may not be fully realised within the electoral cycle.

Secondly, good governance and democracy are not just right in themselves, they are, at least at a certain juncture, critical to political and economic progress. These include not just regard to proper elections, the absence of corruption, respect for human rights. They also include well-functioning commercial, fiscal and legal systems. People need to know the rule of law is not an empty phrase. They need to know that taxes will be collected and litigation fought over, in a fair and open system. It is hugely to India's credit that, with all its difficulties and vast population, it provides such governance. Increasingly in the field of development assistance, donor nations are realising that help with a proper system of government or law is at least as crucial, sometimes more so, than cash.

Thirdly, the welfare state of the future is based on a social contract between citizens. The relationship cannot simply be one of give by the state and take by the recipient. It must encompass rights and duties. We have a very generous programme to help unemployment in Britain. But we insist that opportunities given are matched by a responsibility to make the most of them or state benefit can be withdrawn. And part of this social contract concerns criminal behaviour. The young child in the village in Bangladesh who told me that when he grew up he wanted to be a lawyer so that he could "hang the criminals" may have taken it a little far! But he was articulating a heartfelt anger in communities the world over at the misery and arbitrary tragedy that crime provokes. There are of course social causes of crime. Tackling them - the poverty, poor housing, lack of education - is part of that social contract. But the causes can't excuse the criminal. Citizens need protection and they should have it.

Fourth, my constant theme, before September 11 and increasingly since that fateful day, is global interdependence.

Long before September 11, Afghanistan was a failed state, exporting terrorism around the world, living off the drugs trade, the source of 90 per cent of the heroin on British streets; and millions of its people stateless refugees, seeking asylum not only in the immediate region but also in Europe. Finally, it erupted into shocking evil on the streets of America.

Growing Interdependence
This interdependence is being intensified by a number of factors. Global trade has grown twenty fold since 1947, the year in which India became independent and the GATT was formed. Global finance has grown six fold in the last ten years. Today's economies and markets are heavily swayed by that intangible essential, confidence. Just a few years ago, the East Asian financial crisis nearly provoked a global slowdown. Tensions in the Middle East can impact on the price of oil. Post September 11 there was an immediate effect on the world economy.

Confidence is, by its very nature, directly affected by political events. Those that promote stability increase confidence. Those that tend to instability diminish it. And it can show up, quite quickly, on the jobs, investment and hence living standards of communities in countries like Britain, far from the original source of instability.

Add to that the information revolution. Its consequences are not only economic. It provides, immediately and across the globe, news, views, information that can excite and influence opinions. Again, after 11 September, the battle was not just military - there was a battle for hearts and minds. Would action in Afghanistan be seen as anti-terrorism or anti-Muslim? Had the international coalition been weaker, had the false propaganda that it was anti-Muslim been widely accepted, the whole train of events could have been quite different and adversely so.

Then there is migration and travel. Some interesting facts: 25 per cent of the US population today is Hispanic; there are 4.7 million Muslims in France, 2.6 million in Germany; 1.3 million Indians in the UK, almost 4 million people of Asian origin. The city with the second largest Greek population is not in Greece but Australia. There are over 300 languages spoken in London schools today. The tensions in such migration are very familiar to us. People rightly seek order and discipline in how it occurs. But that it will occur in an ever more intense fashion is frankly beyond doubt.

In consequence of this, politics itself is globalising. If the WTO succeeds, nations prosper. If the problems of global warming are tackled, every nation's environment is helped. If the global financial system is properly ordered, our economies prosper. If international terrorism is defeated, we are all safer. Very few of these problems can be addressed effectively other than by common action. Hence the need to make alliances to secure it.

So alliances between nations become a vital part of a nation's self-interest and standing, its ability to secure the advances it needs.

Which brings me to the fifth rule of politics we can discern today. In this interdependent world, nations need to define their place in it. Other nations need to know what any particular nation stands for, where it is located in the multiplicity of alliances and interests around it.

Here both our nations are in a process of change.

India's Potential
India's success today is rooted in its long history of civilisation and strong tradition of democracy, grown out of a rich patchwork of ethnicity, religion and language. It is this combination of stability and diversity, which gives India such powerful potential.

Over the last decade, more than ever before, India has been realising its potential. The green revolution set the stage, giving India self-sufficiency in food. By opening up its economy in the early 1990s, India released its creative potential, making it one of the fastest growing economies in the world - soon set to join the top ten - much of it based in cutting edge technologies like IT and biotechnology. And India's culture too has impacted worldwide. Bollywood films are seen all over the world. Writers like Arundhati Roy and Gita Mehta have as strong a following in the UK as in India.

So India is strong internally, vibrant culturally and economically, and influential internationally. Its traditions of freedom and democracy make India an obvious partner for us. Its diversity and energy put it in a prime position to benefit from today's globalising world.

For Britain, there is both challenge and opportunity. The days of Empire are long gone. Europe has been at peace for half a century. Britain has the fourth largest economy in the world but our land mass and population inevitably constrain us. We are not a superpower, but we can act as a pivotal partner, acting with others to make sense of this global interdependence and make it a force for good, for our own nation and the wider world. In so doing, I believe we have found a modern foreign policy role for Britain.

In part this is by virtue of our history. Our past gives us huge, perhaps unparalleled connections with many different regions of the world. We are strong allies of the US. We are part of the European Union. Our ties with the Commonwealth, with India and other parts of this sub-continent, are visibly strengthening. Similarly, our relations with the Middle East, with Russia and China, are all areas where we are enjoying a closer friendship than for many years. Japan already rightly regards us as a leading partner for it in Europe.

Our armed forces in their professionalism and skill give us reach and influence abroad. It is generally accepted that our development assistance programmes, massively increased since 1997, give us an opening to help partner countries achieve their goals. The initiative on Africa is one prime example.

The opportunity therefore is obvious. It shouldn't be exaggerated. I stress the role is as partner. The challenge, however, is to throw ourselves into this role with confidence, to discard isolationism or retreating into nostalgia. Whatever the merits of membership of the Euro for Britain, the proposition that Britain should be an involved, constructive, leading partner in Europe, seems to me indisputable. It is the key alliance right on our doorstep. We are in it. We aren't going to leave it. So let us make the most of it, with confidence.

Likewise elsewhere, as here in India, we should engage without hesitation - with humility about the limits of what we can do, but with conviction that much can indeed be done together.

Finally, a rule that is a warning.

One consequence of all this economic, political and, above all, technological change is that the change itself moves so fast today. The opportunities are there to be seized. But time doesn't wait for the hesitant. Moments come in which new directions can be struck, but they pass. The pace, in particular, of the information revolution, and soon the revolution of the human genome, requires in business and in politics a perpetual alertness and willingness to adapt. Nations can be left behind. Businesses, even whole industries, can become obsolete. And we have to look ahead. Let me give one example that I think it is vital.

We have had a wake-up call about religious fundamentalism and fanaticism. There are many reasons why the Al Qaida network developed. But one reason that cannot be ducked is fundamentalism. We need a twin track approach. One, within the Moslem world, is to take on the fanatics, the extremists who warp the true message of Islam, which is caring and decent. That can only be done by the true voice of Islam itself; it can't be imposed from outside. And it must deal with the fanaticism head-on; the schools that teach it, those who preach it, the political extremism that feeds on it. It is immensely encouraging that there are real signs that many clerics and political leaders in the Moslem world are now reclaiming the true values and spirit of that great faith.

Simultaneously, we all need to build a bridge of understanding between faiths. There is too much ignorance, too much prejudice, too little tolerance and all those things are dangerous in today's world. Understanding the other person's point of view does not shut out the storm but it gives us shelter under which we can discuss and debate and plan ways forward, with mutual respect rather than fear as our guide.

There is so much here for Britain and India to work on together. A new century. A new partnership. A shared future.

India's role in peacekeeping from Bosnia to Sierra Leone is just one example of the true international leadership your country has shown the world. India is now a natural contender for a permanent seat on the UN Security Council. We will work with you to achieve it.

India knows better than most the terrible risks posed by climate change, especially to some of its low-lying coastal areas. The agreement in Marrakech last November showed that we make progress. Now we need to make a success of the World Summit on Sustainable Development in Johannesburg in September. India and Britain should co-ordinate closely on our approach.

Nearly a quarter of the world's population live on less than one US dollar a day. This year nearly 11 million children will die from poverty-related diseases. And 120 million children worldwide are denied the right to basic schooling.

Millennium Development Goals
Both India and the UK are jointly committed to the UN Millennium Development Goals, including that of halving, by 2015, the proportion of the world's population living in abject poverty. Despite India's economic progress, there are still some 300m million people here who are very poor. So much remains to be done.

The next couple of years will see a major increase in the UK's bilateral development programme in India, rising from £175 million in the current financial year to £300 million in 2003/04. We intend to increase this further in years to come. Our funding is allocated according to a strategy agreed with the Government of India, and includes spending on health and education and on improving, and getting access to, services for those who need them most.

This month we expect to see the signing of agreements for £98 million of UK government support for polio eradication in India and £123 million for HIV/AIDS relief. In addition, £32 million has been agreed for rebuilding primary schools damaged in the Orissa supercyclone.

Ultimately, the key to reducing poverty is economic growth and policies that help the poor.

The lifeblood of the global economy is trade.

Since the end of the Uruguay Round in 1994, developing countries' trade has grown at twice the rate of other countries. That is good for you and good for us.

But not all have benefited equally. Our common challenge now, with the start of a new WTO trade round in Doha last November, is to ensure that globalisation spreads the benefits of economic growth throughout the world and reduces poverty.

The UK is committed to pressing for an EU negotiating position which promotes development. This should include opening markets in the developed world through substantial cuts in high tariffs and subsidies, which distort trade. And developing countries also have much to gain by opening their own markets to trade with each other. Again, let us work together on this.

Educational links between the UK and India are flourishing. We are on target for our goal of doubling the numbers of Indians studying in the UK. And I can announce that as a result of the initiative to attract private sector funding for more Chevening scholarships, we will be increasing funding of the India programme to £2 million a year.

We enjoy just as strong links in science. In Delhi on Monday I will open the British Council Science Festival, the largest gathering of top-level British scientists ever outside Britain. We also look forward to better networking between British and Indian scientists, including a substantial number of new scientific scholarships.

Partners In Trade and Investment
And the UK and India are already strong partners for trade and investment. The UK is India's second largest trading partner. Already there is £5 billion of trade between us. I am confident that India will, in the early part of this century, join the world's top ten economies.

Since the Indo British Partnership was formed in 1993, UK-India bilateral trade in goods and services has grown by more than two-thirds, and more than 1500 new Indo-British joint ventures have been approved. There has been significant investment by British firms in India, while in the UK some 250 Indian companies are now also well-established investors.

To encourage such activity, the UK Government has relaxed procedures for work permit holders, especially in high-tech industries. And we have simplified processes for allowing innovators and entrepreneurs to set up business in the UK.

The CBI and the CII intend to hold a major economic summit in London in July 2002 involving senior CEOs from both countries, in part to look at the major challenges we face together.

So this is a big, even heady agenda for us to develop.

Ladies and Gentlemen for reasons that don't need stating, from time to time since independence, relations between Britain and India, have let me put it diplomatically, occasionally been a little scratchy. Not so today. Today relations are strong and confident and the deep affection and fascination the people of Britain have always had for India has never waned. History, culture, shared interests and values and now those of Indian origin living in Britain - values contributing enormously to our society, bind us together. India is changing finding its place in this new world as it grows in power all the time. Britain likewise.

And as I look around today and I see so many people from different works of life; I see so many people with talent and ability who have contributed so much to the work and life of India and people from the UK also here. And I reflect on the different type of world in which our children are growing up today. I really do believe there is no place for the old misconceptions and understandings. There is a genuine sense of shared purpose and values today. And if these terrible events that have so marked all our conceptions in the past few months, if these terrible events can bring any good into the world, it is the absolute recognition that what unites us - people who believe in civilised values the world over, what unites us is infinitely more important than anything that can ever divide us.

I believe that partnership that I talked about between our two countries and between our two countries and others in this world can be made a reality. Sometime it's said that it is too utopian to think that we can change the world in the wake of these terrible events. What I would say is that if we don't at least try to change the world what point is there in politics or government or any form of society at all. We exist in order to change the things that we believe are wrong. And I also don't believe that it is utopian to think that it is important to bring about change in this world.

It is not utopian, because to tackle these issues, whether of terrorism or of global poverty or of how we make sure that trade and finance are spread across the world, to tackle these problems is not simply morally correct, it is massively in the interest of our nations and every single one of our citizens - men, women and children within them. It is a different world that is opening up. It is a world confronted by huge challenges and enormous possibilities and the ever-increasing pace of change. We Britain and India, I believe, I genuinely believe have much to offer each other. Our partnership for a better and safer world await. I extend to you today our respect our, our solidarity and most of all our friendship to make that new partnership a reality for our new world.