British Prime Minister Boris Johnson recently dismissed the possibility of easing immigration rules for Indians in the House of Commons as part of a Free Trade Agreement (FTA).
Sir Edward Leigh, a right-wing Conservative party MP, had expressed serious concerns about reports that Britain was contemplating making such a concession, and warned the PM that “we should not be held to ransom”.
To this, Johnson replied, "I do not recognise the account that my honourable Friend has given. We do not do free trade deals on that basis.”
Amid all the speculations and hope among both the countries, the UK and India launched negotiations on an ambitious Free Trade Agreement (FTA) at an event in New Delhi on 13 January 2022. UK International Trade Secretary Anne-Marie Trevelyan and Indian Minister of Commerce and Industry Piyush Goyal formally started talks on a deal that could create huge benefits for both countries.
The future rounds of negotiations will take place approximately every five weeks. The Indian negotiating team will be led by Nidhi Mani Tripathi, Joint Secretary, Department of Commerce and the UK negotiating team will be led by Harjinder Kang, Director for India Negotiations at the Department for International Trade.
One of the primary objectives of the UK to make this FTA a success with India is to send a powerful signal to the rest of the world that the UK is an independent trading nation, will continue to champion free and fair trade, fight protectionism, and remove barriers to trade at every opportunity.
This deal has the potential to almost double UK exports to India, boost total trade by as much as £28 billion a year by 2035, and increase wages across the UK by up to £3 billion. Investment from Indian companies already supports 95,000 jobs across the UK.
The agreement slashes barriers to doing business and trading with India’s £2 trillion economy and market of 1.4 billion consumers, including cutting tariffs on exports of British-made cars and Scotch whisky.
While there’s a lot in store for the UK, especially the West Midlands (See P15) to benefit from the FTA, India’s hope for visa relaxations and the further potential for benefitting Britain’s former colony is yet to be articulated to understand how exactly India will enjoy the perks of this FTA.
A Department for International Trade spokesperson told Asian Voice, “India is projected to become the world’s third-largest economy by 2050, and a Free Trade Agreement will open up huge opportunities for UK businesses to trade with India’s £2.25 trillion economy. An agreement could create significant benefits for both countries and could boost our total trade by up to £28 billion a year by 2035.
“The United Kingdom is already a top choice for investors, offering strong returns in a high-skills economy which benefit all regions of the country.
“Over 15,000 new jobs were created by Indian investment into the United Kingdom in the last three years alone. A Free Trade Agreement with India could secure more investment opportunities for our businesses, including among the Asian business community. At the same time, a deal with India will also support UK-based companies to invest and operate overseas. This will be ever more important as we forge new trading relationships around the world, including with India.”
Sanjiv Mehta, President, Federation of Indian Chambers of Commerce and Industry (FICCI), told Asian Voice, that the negotiations were very “reassuring”. He said, “The urgency and pace exuded by the UK to fast-track the FTA negotiations illustrates the importance accorded to India as a key economic partner. Emphasis on promoting new frontiers in the future is noteworthy. This will help both countries to build greener, more innovative, and more sustainable economies. FICCI members from the Agri, Pharma & Life Sciences, Renewables & Electric Vehicles, Financial Services and Healthcare sectors, amongst others, would be closely following these discussions, towards which they have shared their recommendations with the Government of India. We hope these would help the Indian Government to negotiate a win-win deal with the UK.”
By 2050 India will be the world’s third-largest economy
International Trade Secretary Anne-Marie Trevelyan said, “A deal with India is a golden opportunity to put UK businesses at the front of the queue as the Indian economy continues to grow rapidly. By 2050 India will be the world’s third-largest economy with a middle class of almost 250 million shoppers. We want to unlock this huge new market for our great British producers and manufacturers across numerous industries from food and drink to services and automotive.
“As an independent, deal-making nation the UK is broadening our economic horizons and forging stronger partnerships with the fastest-growing economies of the world. India marks the start of our ambitious 5-star year of UK trade and will show how the deals we negotiate will boost the economies across all nations and help level up all regions of the UK.”
Prime Minister Boris Johnson told us, “A trade deal with India’s booming economy offers huge benefits for British businesses, workers and consumers. As we take our historic partnership with India to the next level, the UK’s independent trade policy is creating jobs, increasing wages, and driving innovation across the country. The UK has world-class businesses and expertise we can rightly be proud of, from Scotch whisky distillers to financial services and cutting-edge renewable technology. We are seizing the opportunities offered in growing economies of the Indo-Pacific to cement our place on the global stage and deliver jobs and growth at home.”
Access to talent pool
Mahesh Raikar, Owner-Founder, Wrapchic - Differently Indian restaurant Franchise told us, “The New UK- India Free Trade Agreement is exciting news for SMEs like us The agreement will reduce barriers to the trade of goods, especially as our businesses rely on imports of spices, rice, pulses etc. and lower import costs that will help retain margins for an industry that is seeing immense cost pressures. Believe this agreement will also bring significant investors from India into in UK’s SME & Startup companies. Overall FTA enhances trade relationships giving access to the market for long term benefits for both countries. As the agreement would also ease visa restrictions between the countries this will give our business access to the talent pool there is in abundance in India be it chefs/Marketing professions etc.”
Major opportunities for UK automotive companies
Mike Hawes, Society of Motor Manufacturers and Traders (SMMT) Chief Executive, said, “The automotive industry supports fair and balanced trade deals with both new and established markets. India is one of the fastest-growing global markets with increasing demand for personal mobility and long-term plans to transition to electric vehicles. This presents major opportunities for UK automotive companies which, due to their global competitiveness, diversity, and expertise, have already proved attractive for Indian investment. Key to any future trading relationship will be the progressive removal of tariffs, enhanced trade facilitation and reducing other barriers to trade, which can be highly complex and burdensome.”
Richard Heald OBE, UK-India Business Council Group Chair, told the newsweekly, “The UKIBC warmly welcomes the launch of these important negotiations. Particularly the breadth and ambition outlined, covering goods and services, particularly the IP-rich, digitally-driven services where the UK and India already excel. It matters - for businesses and consumers - when the world's 5th and 6th largest economies negotiate an FTA. India is an increasingly attractive destination and as the India opportunity grows, an FTA will make it easier for UK businesses to trade and invest there.”
Forge strategic alliances
Speaking to Asian Voice about the launch, Lord Rami Ranger CBE, founder of Sun Mark, an international marketing and distribution company said, “The free trade agreement between India and the UK will be the mother of all free trade agreements. It will be like Britain having free trade agreements with at least 10 countries. It will be between the 4th and 5th largest economies and between the oldest and the largest democracies of the world. More importantly, they are both secular and democratic countries with the rule of law at the heart of their governance. There is nothing incompatible between the two nations.”
According to Lord Ranger, friendship always flourishes when countries share similar values. “Unlike China, India does not undermine British interests, nor does India suppress its citizens like China’s Communist Party does. India offers a huge market of over 1.3 billion people with nearly half a billion of them being of middle and upper-class with a huge buying power,” he said.
“Indian soldiers proved their loyalty to the British Empire in both the Great Wars. Indians also came to rebuild Britain after the devastating wars and worked in factories, transport, hospitals, and schools. India is already the second-biggest investor in the UK, and the wealthiest families in Britain are Indians. Indians are also in the British government making their mark apart from running many big businesses.
“British companies are ahead in terms of innovation, technology and organisational skills. Britain can pass low tech, labour intensive and repetitive work to India whilst focusing on the core business of innovation and the development of high-tech industries.”
Lord Ranger added that the trade within Britain and in Europe is not growing as much as the Indian market. He believes the solution is in linking up Indian companies with British companies to drive out sluggish growth. “For example, India is the largest buyer of defence equipment because its two hostile neighbours and Britain’s arms industry is in decline. By working together, British firms can manufacture defence equipment in India, gain a considerable market locally, and grow their export potential. The same goes for the pharmaceutical industries, films, energy and so on. India can offer British firms the scale of production needed to meet the global need as the coronavirus pandemic has already shown us,” he explained.
“More importantly, we cannot get a more motivated workforce than in India because of the tough competition for employment, makes people work harder. We can see how Indians have excelled throughout the world against difficult circumstances. They are now running most of the blue-chip companies in the world.
Indians now have more disposable income as salaries and are directly at par with the West in many sectors. The Indian diaspora of over 30 million strong settled in over 100 countries is travelling to India more frequently than ever before, thus increasing demand for Western products. Income, international travel, and media awareness have significantly increased the demand for British products in India.
“Finally, to grow businesses, one needs to merge, acquire or forge strategic alliances with companies and free trade agreement between the UK and Britain offers these possibilities and more.”
Trade focused on sustainability
Joywin Mathew, Partner, Head of India Practice, UK, DLA Piper UK LLP told the newsweekly, “An FTA will benefit the United Kingdom and businesses trading with India. It would mean reduced barriers to trade, increased competitiveness, and the opportunity to tap into the significant demographic in India. The services sector too in which the UK leads will benefit from the increased access which the FTA will provide. UK has a market-leading financial, technology and professional services sector. The skills and the increased participation from these sectors in the Indian economy would only benefit the country as it pursues its growth trajectory.
“With COP26 having recently concluded, it is also going to be relevant for trade to be also focused on sustainability. With the UK already recognised as being a leader in climate change mitigation related initiatives, there would be many opportunities for both countries to exchange skills and ideas thereby enabling the commitment of both the UK and India towards achieving their respective green and sustainability goals.”