The UK-India relationship was taken to new heights last week with the launch of negotiations on a new ambitious free trade agreement (FTA) between our two great democracies. Having last year having already signed an enhanced trade partnership to double bilateral trade by 2030 the FTA could boost our trade by up to £28 billion by 2035. International Trade Secretary Anne-Marie Trevelyan met with her counterpart, Indian minister of Commerce and Industry Piyush Goyal, to formally start talks. As the founding Chairman of the UK-India Business Council, I believe for the UK, a trade deal with India, a rapidly advancing global economic superpower, can unlock a new era of partnership and pave the way for significant trade and investment opportunities for UK and Indian businesses. As President of the CBI, I look forward to supporting in the formation of the agreement and in helping businesses across the UK and India, make the most of the benefits of the FTA.
Throughout the pandemic, a collaboration between the UK and India was at the forefront of the battle to combat the virus, as witnessed by the success of the Oxford University/Astra-Zeneca vaccine in partnership with the Serum Institute of India (SII), the largest vaccine manufacturers in the world. To date, the SII has produced 1.4 billion doses of the vaccine! Economically too, the UK and India are significant investors and markets for each other’s economies, contributing hugely to the countries growth. There are over 800 Indian companies in the UK contributing nearly £50 billion to the economy and employing hundreds of thousands of people across the country. And in India, there are hundreds of British businesses employing 1 million people both directly and indirectly. And, as the fifth and sixth economics in the world, and as the largest and oldest democracies, strengthening ties between our nations will be key to championing free and fair trade. So a free trade deal is a golden opportunity to slash further barriers to trade. Removing duties on leading British exports such as Scotch Whiskey and cars which face duties in India of 150% and 125% respectively could be some huge early gains for UK businesses.
From renewables and FinTech to R&D and higher education, a trade agreement has the potential to build on our past successful collaboration – creating jobs and opportunities across the country. But to fully capture the benefits of a free trade deal, the UK must focus on the areas which will drive our future economic success and where the UK has a competitive advantage. The UK and India are both global experts in renewable energy, as the world transitions towards a greener economy, there is real appetite to collaborate on green projects such as green hydrogen, wind power, solar power, electric vehicles and battery technologies. The strength of our relationship was demonstrated on the world stage at COP26 with Prime Minister Johnson and Prime Minister Modi agreeing to accelerate action on clean energy and sustainable finance. The UK should lean into its strengths and seek to unlock barriers through this deal that will allow its trading partner to access a dynamic ecosystem of green services and goods, as well as green finance with London emerging as a global leader - that can really bolster bilateral economic growth.
Safeguarding UK innovation and creative industries through protecting its intellectual property and instilling confidence into UK businesses will help propel more trade with India. The UK is home to some of the brightest and most creative ideas around the globe. Businesses want guarantees that the innovative ideas and products they bring to market are backed up by iron-clad legal protections. And as the lifeblood of the modern economy, firms want to see further progress on creating more open data flows, which will enable UK businesses to deliver cutting edge services to its customers, ensuring smooth delivery of operations and enabling research and development which will help boost exports into the region.
The CBI economic forecast starkly highlighted the negligible contribution from exports to UK’s growth. For a great trading nation such as the UK, this simply will not do. We must and can do better. The responsibility for supporting firms to go global, to compete and build our economy doesn’t just sit with the government. It’s also up to businesses to proactively seek growth opportunities. The Indo-Pacific contains some of the fastest-growing economies and will be home to the largest middle-class population by 2050. Exporting and growing international revenue, therefore, needs to be a priority. We know that businesses that export are more competitive, dynamic and innovative. All companies should be encouraged to have the mindset and desire to export from day one – as with my experience at Cobra Beer.
The 1.5 million-strong Indian diaspora, is a large and thriving ethnic minority community in the UK they are the living bridge between the UK and India. With trade and mobility intrinsically interconnected, businesses ability to move people across borders is crucial to expand their pool of talent, drive productivity and go global. The UK government has already made great strides in allowing more Indian professionals and skilled workers to come to the UK, along with the re-introduction of the two-year post-graduate work visa programme. With both India and the UK home to thriving services sectors firms will be keen to see constructive dialogue on making it easier for them to practice, invest and grow in India and Britain.
This deal is not simply about a free trade agreement. Globally, the axis is shifting, the world economy is thriving to become greener, more services orientated and tech-driven and Asia is taking centre stage to become a key export destination of the world. For the UK to remain globally competitive, it must position itself as the trading partner of choice in the region. A deal with India can act as the key anchor in the region.
