As per the British official announcement, Prime Minister Boris Johnson is visiting India “as part of the UK’s Indo-Pacific tilt”, and to deepen bilateral ties “in the face of global economic challenges and threats from autocratic states”. On his two-day visit to India starting on April 21, Johnson will first go to Ahmedabad, in Gujarat, and the next day proceed to New Delhi where he will meet Prime Minister Narendra Modi.
This broadly means working together for a post-pandemic recovery, how to deal with assertive China, and discuss the Russia-Ukraine war. Earlier, UK Foreign Secretary Liz Truss was in India as part of the British ‘diplomatic push on Ukraine’. So all these issues are likely to be emphasised in public statements. But the real issue is going to be a push for an early conclusion of a bilateral trade agreement.
Since Brexit, India and the UK have been trying to strengthen ties further. Now relations have been elevated to a ‘comprehensive strategic partnership’, which is based on ‘shared commitment to democracy, fundamental freedoms, multilateralism and a rule based international order’. Last year, at a virtual summit, Modi and his British counterpart adopted an ambitious ‘Roadmap 2030’. It highlights growing convergence in trade, defence, climate action, and people-to-people contacts.
Johnson is visiting at a time when Indian goods and services exports are at all-time high and touched $670 billion in 2021-22. Besides, New Delhi has recently signed trade agreements with the United Arab Emirates (UAE), and Australia. Although strategically India has not aligned with the West on the Ukraine issue, it has suddenly re-oriented its approach towards trade deals. These factors have brightened the prospects of an early India-UK trade agreement.
During the Brexit referendum, and the subsequent debates, it was asserted that the UK’s trade ties with many countries, including India, were constrained by the complexities of European Union (EU) membership. The implication was that once the UK left the Union, it would be able to quickly negotiate and finalise FTAs with New Delhi and others. So far it has signed deals with Australia, and New Zealand, and is negotiating with India, the United States, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) nations.
In July 2020, trade ministers from India and the UK reached an agreement in principle for an Enhanced Trade Partnership (ETP), which was launched in 2021.
After the UAE, and Australia, it seems New Delhi is also eager to forge an interim trade deal with European countries. This has become important as textiles, footwear, marine exports and so on are affected by increasing exports to Europe from Bangladesh, Cambodia, and Vietnam.
While India and the EU have agreed to resume trade talks soon, Brussels has not settled for New Delhi’s preference for a limited trade deal to begin with. So, due to the comprehensive nature of the proposed deal with 27 countries together, EU-India negotiations are going to take longer to complete.
In comparison, India and the UK are likely to sign a trade deal, perhaps within this year. The initial deal could liberalise the food and beverage sector. Major Indian exports in the sector are rice, tea, fruits and vegetables, prawns, while about 90 percent of the UK’s exports to India are Scotch whisky, which attracts 150 percent tariffs. The UK could also gain in the areas of financial and legal services.
India could negotiate for the movement of natural persons supplying services, and a limited migration MOU was already signed with the UK last year. Under the deal, India can send 3,000 young professionals annually to the UK in exchange for taking back undocumented migrants.
Although trade negotiations were launched only in January, four out of 26 chapters have been completed at the end of the first two rounds of talks. Progress has also been made on the remaining 22 chapters. The next round is scheduled later this month.
Although Britain and Europe are busy in Ukraine at the moment, China and the Indo-Pacific region are still a major worry for them. The UK government’s Integrated Review asserts that during the next decade, the UK will deepen its engagement in the Indo-Pacific and transform its already close co-operation with India. During the visit, India would like the UK to concentrate more on the Indo-Pacific again. All three elements of the UK’s foreign policy ‘tilt’ towards the Indo-Pacific — security, economy, and values — are bringing India and the UK closer.
As India is shedding its cautious approach towards trade deals, the India-UK FTA fits well with UK’s post-Brexit ambitions, and India’s current strategic and economic choices.
Gulshan Sachdeva is Professor at the Centre for European Studies and Coordinator, Jean Monnet Centre of Excellence, Jawaharlal Nehru University. Views are personal, and do not represent the stand of this publication.