The India-UK free trade deal, which has missed the Diwali deadline, is likely to get the much-needed impetus with Rishi Sunak taking over as Britain’s first Indian-origin Prime Minister as experts see political stability in the UK giving momentum to negotiations.
India and Britain launched negotiations for the free-trade agreement (FTA) in January with an aim to conclude talks by Diwali but the deadline was missed due to a lack of consensus on issues.
Sunak, in his previous role as Chancellor of the Exchequer, had expressed support for the FTA as he saw enormous opportunities for both countries in the fintech and insurance sectors.
According to the experts, political stability in the UK now would help fast-track the negotiations for the pact, which could potentially double bilateral trade by 2030.
The total trade between India and the UK stood at USD 17.5 billion in 2021-22.
Sunak, 42, on Monday took over as Britain’s first prime minister of Indian origin.
“It is very positive news for India. The development will definitely help in giving much-needed momentum to the talks,” Federation of Indian Export Organisations (FIEO) Vice Chairman Khalid Khan said.
However, Biswajit Dhar, Professor at the Jawaharlal Nehru University, said the new UK prime minister would like to first focus on domestic issues and set the economy in order.
“Trade deals do not happen when there is a crisis. They happen when the economy is performing well,” Dhar said.
Another trade expert added that both sides should not be in a hurry to conclude the talks and things should be first allowed to stabilise in the UK.
“I’m very supportive of India playing an increasingly influential role in the region, and indeed, in the world as a massive economy and the world’s largest democracy and an FTA would prove a greater champion of that cause,” Sunak had said in July.
Financial service, he had said, was an area of enormous opportunity for both the countries.
“India’s goal is to spread insurance across the entire economy because insurance is a great thing for enabling protection for individuals and growth. We can help with that in the UK because we have a fantastic insurance industry,” he had said.
India has in recent times signed trade deals with the United Arab Emirates and Australia but talks with the UK had hit a snag over easier access to Indian skilled workers.
New Delhi is also seeking to claw back payments made by Indian workers towards Britain’s social security system as part of the deal.
The City of London Corporation, the financial hub of the UK capital, expressed hope that Sunak’s focus on services would take the FTA in the right direction.
“An India trade deal could be one of the most ambitious and commercially meaningful deals to the UK,” said Chris Hayward, Policy Chairman at the City of London Corporation.
“With negotiations going beyond Diwali, this presents us with an opportunity to prioritise the content of the deal. And we hope the new Prime Minister will provide a fresh impetus in securing a deal,” he said.
Services make up around 70 per cent of annual trade between the two countries. “So, a deal that doesn’t deliver for this sector would be a missed opportunity. Firms will be keen to see the agreement focus on enabling smoother digital trade, free flow of data and make it easier for people to work and live in each other’s countries.
“This will ultimately bring significant benefits to both consumers and businesses across the UK and India,” he added.
India’s Commerce Secretary Sunil Barthwal had on October 20 stated that negotiations for the proposed trade pact between India and the UK are moving in the right direction, and both sides are expected to reach an agreement soon.
In a free trade agreement, two countries either eliminate or significantly reduce customs duties on maximum number of goods traded between them, besides easing norms for promoting investments and services trade.
The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022.
India’s main exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, metal products, machinery and instruments, pharma and marine items.
Major imports include precious and semi-precious stones, ores and metal scraps, engineering goods, professional instruments, non-ferrous metals, chemicals and machinery.
In the services sector, the UK is one of the largest markets in Europe for Indian IT services. The bilateral trade increased to USD 17.5 billion in 2021-22 compared to USD 13.2 billion in 2020-21. India’s exports stood at USD 10.5 billion in 2021-22, while imports were USD 7 billion.
Other strategic experts point out that Sunak had not visited India during his tenure as Chancellor of the Exchequer and takes over at 10 Downing Street at a particularly tumultuous period to be able to focus on ties with New Delhi.
“Rishi Sunak is yet to be tested on foreign policy and defence issues,” says Rahul Roy-Chaudhury, Senior Fellow for South Asia at the International Institute for Strategic Studies (IISS) think tank in London.
“Having been born in the UK with parents originating from East Africa, Rishi Sunak has not been a public advocate of strong ties with India during his parliamentary and ministerial stints.
“Indeed, as Chancellor of the Exchequer for over two years, he did not visit India even once. There is no indication that this outlook is likely to change as Prime Minister when he needs to focus on a much larger foreign and security canvas,” he said.
Meanwhile, Sunak’s commitment to achieving a partnership of equals between India and the UK with two-way flows of talent is expected to distance the government from former home secretary Suella Braverman’s recent controversial statements on Indians as the largest group of visa overstayers — which pushed the FTA negotiations further off track.
“The UK doesn’t have a monopoly on the opportunity. There’s an enormous amount of opportunity in India, we also want to make sure that if this living bridge is going to be a real thing, we have got to make it easier for people in the UK to go to India, to study at world-class institutions to go work in all these amazing start-ups,” Sunak had said while he was the finance minister.
The National Indian Students and Alumni Union (NISAU) UK has called upon him to be the Prime Minister who addresses a long-standing issue and removes international students from being counted as part of the country’s migration figures.
“I hope that Rishi as PM will champion the skills and knowledge exchange critical to the growth of both our countries and not bow down to noise on immigration from the far right,” said NISAU UK chair Sanam Arora.
“I sincerely hope Rishi also recognises the bizarre situation of counting international students as migrants and we call on him to be the PM who changes this, a move that can be transformative for the British economy and higher education sector,” she added.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)