Global Britain must push for a lucrative trade deal with India
Johnson needs to do better than his predecessors and seize the chance when he visits, says
Britain’s latest foray to India follows a decade of false starts. David Cameron made a two-day trip shortly after coming to power in 2010, saying he hoped to lay down the foundations for an “enhanced relationship” between the countries.
He returned with gusto in 2013, bringing with him more than 100 representatives including business leaders, university chiefs and ministers – the largest trade delegation ever taken by a British PM.
But a fundamental question was going unanswered. Was the UK prepared to offer India what the rapidly developing country wanted: access to visas so its students and workers could come to Britain?
The answer was an emphatic no. That fundamental disconnect stymied any real progress that could be made. Despite Cameron’s optimism, trade with India dwindled.
By the time Theresa May finished her own trip in 2017 – with a slimmeddown 33 delegates – relations appeared to be at a low.
Lord Karan Bilimoria – president of the CBI, founder of Cobra Beer, and Britain’s pre-eminent Indian-origin businessman – has been on every major UK delegation over the past two decades.
“These were all big delegations with a big impact, and each time you felt the relationship with India was getting stronger and stronger,” he said. “And then we had this delegation with Theresa May … that was not a successful visit at all.”
May received a cool reception, with The Hindu (one of India’s biggest papers) accusing her of being “oblivious” to the impact that visa restrictions – including some introduced just days before May’s trip – would have on Indians. A Commons foreign affairs select committee report in 2019 summed up the predicament neatly: “While the Global Britain strategy is barely being communicated in India, the ‘hostile environment’ message is being heard loud and clear.”
It’s against this backdrop that Boris Johnson is set to visit India later this month, as part of the Government’s post-Brexit strategic tilt towards the Indo-Pacific region.
With a population of 1.3bn – more than a tenth of whom have English as a second language – and projections of rapid economic growth over the coming decades, India presents a vast potential market for British companies. India is the second-biggest foreign investor in the UK (after the US), but it is only Britain’s sixth-largest non-EU trading partner, representing just a small part of overall trade – meaning there may be significant scope for growth.
Professional and financial services firms are seen as particularly likely to benefit from closer relations. Western accountants and lawyers have found it difficult to work in the country due to protectionist policies, but these are expected to loosen. Similarly, India’s latest budget boosted the maximum stake foreign investors can hold in insurance businesses to 74pc from 49pc.
Other sectors could also stand to benefit. An industry report released by the Food and Drink Foundation last year named India as one of the five “key growth markets” that producers should target, with exports nearly tripling between 2008 and 2018. A closer look at the figures reveals it is almost totally dominated by spirits, with Indians among the biggest consumers of Scotch whisky – which currently faces 150pc tariffs, a clear target for UK negotiators.
Areas like fintech and banking could harness a demographic boom as millions of Indians move into the middle classes, while education – both through more Indian students coming to study in Britain, and UK universities setting up Indian campuses if restrictions are loosened – could also prove fruitful.
Johnson’s visit will cement steps made during recent trips by the Foreign Secretary, Dominic Raab, and the Trade Secretary, Liz Truss, locking in an enhanced economic partnership between the two countries. On top of that, the PM has invited his Indian counterpart Narendra Modi to the G7 Summit, set to be held in Cornwall this June. It is symbolic that the trip would mark Johnson’s first official trip since the onset of the pandemic. It’s something of an awkward first dance for both nations. Britain is taking its starting steps as an newly independent trading nation, while India is only beginning to open up after a long period of isolationist policies.
Arvind Panagariya, a professor of Indian political economy at Columbia University’s School of International and Public Affairs, said the UK presented a natural fit for what would be India’s first significant trade deal since the 1990s.
“I have been arguing that the starting point ought to be the UK. It’s just one country, the complexity is going to be less … in a symbolic sense if you want to get started, then it’s a good place,” he said.
The timing of Johnson’s looming visit is important: Indian and EU delegates will meet in Portugal early next month, with New Delhi seeking to rebuild Western links as its relations with China grow ever more frosty.
The PM will hope to get ahead of Europe in an effort to regain diplomatic and economic ground lost to rivals such as France, which has stolen a march on the UK during five years of Brexit navel-gazing.
“There is always a first-mover advantage,” says Professor Sangeeta Khorana, a trade expert at Bournemouth University. “If [Johnson] is able to travel to India at the end of April, I believe that will really help any talks that take place.”
International relations are seldom simple, however, and Britain is likely to find building economic links carries tricky geopolitical challenges.
A report by the Chatham House think tank, released in January, named India among the early targets for
‘I have been arguing that the starting point ought to be the UK. It’s just one country, the complexity is less’
Global Britain that “will be rivals or, at best, awkward counterparts on many of its global goals”.
There’s reason for hope, however. Firstly, Johnson is not his predecessors, and things have changed in the past two years. The PM, who visited India as mayor of London in 2012 following a successful Olympics, has a clear personal brand advantage.
On top of that, the presence of two Indian-heritage politicians – Rishi Sunak as Chancellor, and unabashed Modi aficionado Priti Patel as Home Secretary – in the Government’s top jobs shows the countries’ close ties.
Perhaps most importantly, the current Government has taken meaningful steps to roll back parts of May’s hostile environment. Students set to graduate from this summer can now remain in the UK for two years.
Momentum is building, and for the first time in years it looks like meaningful progress in relations could be possible. Global Britain may still be more of an idea than a reality, but India could be its crucial testing ground.