Bri­tish PM’s trip to In­dia poses dilemma on trade

Kuwait Times - - BUSINESS -

DELHI/LONDON:

Prime Min­is­ter Theresa May will find that the trade-off be­tween market ac­cess and mi­gra­tion ap­plies not just to Brexit when she vis­its In­dia for her first non-EU bi­lat­eral trip since Bri­tons voted to quit the bloc.

Lead­ing Brex­i­teers in May’s gov­ern­ment have locked on to In­dia’s $2 tril­lion econ­omy and market of 1.3 bil­lion peo­ple as a chance to di­ver­sify trade and cush­ion any blow that a “hard” exit from the EU market could in­flict. It won’t be pos­si­ble to cut a bi­lat­eral trade deal un­til Bri­tain has left the EU, but May and host Prime Min­is­ter Naren­dra Modi will have an op­por­tu­nity to stake out open­ing po­si­tions dur­ing her Nov. 6-8 visit.

The process will not be easy. In ad­di­tion to any even­tual trade deal, In­dia will want May to wel­come more of its stu­dents and skilled work­ers, and that would re­quire an un­likely U-turn from the tough line she has taken on im­mi­gra­tion. “Im­mi­gra­tion is one of the things In­dia is go­ing to push for,” said Dhruva Jais­hankar, a for­eign pol­icy fel­low at Brook­ings In­dia. “But May is in a bit of a bind if she gives in, the peo­ple who voted for Brexit will say: what did we vote for?”

Take stu­dents: the num­ber of study visas is­sued to In­dian na­tion­als fell from 68,238 in the year to June 2010 to 11,864 five years later, Bri­tish fig­ures show.

Over the same pe­riod the num­ber of visas Bri­tain is­sued to Chi­nese stu­dents nearly dou­bled. The solution, says busi­ness­man and mem­ber of the Bri­tish par­lia­ment’s up­per house Karan Bil­imo­ria, is to ex­clude for­eign stu­dents from Bri­tain’s statis­tics on net mi­gra­tion, which May vows to cut to be­low 100,000 an­nu­ally, from 336,000 in the year to June 2015.

“It just doesn’t make economic sense to send out the wrong mes­sage to in­ter­na­tional stu­dents, and that’s ex­actly what we are do­ing,” said Bil­imo­ria, the chan­cel­lor of Birm­ing­ham univer­sity who as a young mi­grant from In­dia went into busi­ness and launched the Co­bra beer brand. In­dian com­pa­nies, in­clud­ing in the growing IT ser­vices sec­tor, want Bri­tain to make it eas­ier for their staff to visit on busi­ness. Bil­imo­ria, who will travel with May, urged her to of­fer the same deal as it did to China three-year mul­ti­ple en­try visas for less than 100 pounds.

FAITH IN FREE TRADE

May and Modi will likely ad­dress the prospects for busi­ness co­op­er­a­tion at a high-pro­file tech­nol­ogy sum­mit in New Delhi on Mon­day. But, be­hind closed doors, In­dian of­fi­cials are ex­pected to sound her out on the terms of the United King­dom’s de­par­ture from the Euro­pean Union and what it will mean for In­dian firms that treat Bri­tain as a gate­way to Europe. “At this junc­ture, she has the obligation to ex­plain how Brexit could change our ties,” said one se­nior In­dian diplo­mat who re­quested anonymity be­cause he was not au­tho­rized to speak on the record. In­dia has strug­gled for years to strike a free trade deal with the EU, with of­fi­cials say­ing the bloc is a dif­fi­cult part­ner to deal with be­cause its lead­ers tend to de­liver con­tra­dic­tory mes­sages and of­ten strike a tone they see as mor­al­iz­ing.

An­glophiles in New Delhi see the op­por­tu­nity in Brexit for a win on bi­lat­eral trade. But ex­perts cau­tion that In­dia, which has a his­tory of foot-drag­ging at the World Trade Or­ga­ni­za­tion, is no stan­dard-bearer of open mar­kets. “In gen­eral, things move slowly in In­dia,” said Alan Win­ters, di­rec­tor of the UK Trade Pol­icy Ob­ser­va­tory at the Univer­sity of Sus­sex. Ex­pe­ri­ence shows that deal­ing with In­dia “is a bu­reau­cratic and rather slow mov­ing process”, he added. Bi­lat­eral trade in goods and ser­vices has moved side­ways in re­cent years, to­tal­ing 19 bil­lion pounds ($23.7 bil­lion) in 2014, when Bri­tain ran a deficit of 1.5 bil­lion pounds. UK for­eign di­rect in­vest­ment into In­dia de­clined, mean­while, to 3.6 bil­lion pounds in 2014 from a peak of 13.6 bil­lion in 2011. Any Brex­i­teers in­clined to lapse into misty-eyed nos­tal­gia about the com­mon his­tory and lan­guage of the two coun­tries would be well ad­vised not to.

The Com­mon­wealth that groups coun­tries with his­toric ties to Bri­tain has lim­ited util­ity in the eyes of New Delhi, which con­sid­ers it­self a ris­ing 21st century power and is look­ing for sup­port in ad­dress­ing the threats it says it faces. —Reuters

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