Theresa May Lays Foundation For Free Trade with India

By
Viji Athreye
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British PM Theresa May Visits India

British PM Theresa May Visits India

The Prime Minister of Britain, Theresa May is on a three-day visit to India. The 60-year-old May took over the office of the Prime Minister of Britain in July, 2016, and since then this is her first trade mission, as well as the first bilateral engagement outside Europe. This is May’s first attempt at showcasing the post-Brexit Britain to the world.

The visit of May is aimed at enhancing the ties between two nations which go way back together. The key areas of focus during the discussion will be trade, investment, defence and security. Along with her, International Trade Secretary, Liam Fox, and International Trade Minister, Greg Hands and 40 other business delegates representing the different companies of UK, have also arrived to attend the Tech Summit in Delhi. Ms May will also hold talks with Prime Minsiter Narendra Modi, who will host her for lunch post the Tech summit.

The two leaders are also expected to discuss the Free Trade Deal between the countries, post Britain’s exit from the European Union (EU).

Building opportunities with the United Kingdom

The British Prime Minister is indeed visiting India under a very heavy cloud of uncertainty eclipsed by the toughening of immigration rules governing Indian temporary workers and students. UK itself is not holding strong, with the pound having fallen by nearly 20% post Brexit – UK’s exit from the EU.

The economy of Britain has naturally faced the consequence of this fall and the public are facing strife because of loss of jobs. Britain also lost its top AAA credit rating, which means that the cost of government borrowing will be higher. However, from a positive perspective, May is visiting India to step up engagement with countries outside the 28-nation European Union as Brexit will allow it to do so in a matter of two years. The UK PM, describing India as the closest friend of Britain,  said, “We will be promoting the best of Britain, sending out the message that we are open for business, and making the most of the opportunities offered by Brexit as the world’s foremost champion of free trade.”

UK PM’s India Plan

  • Ms May will begin her tour with a speech at the U.K.-India Tech Summit taking place in the capital.
  • She will meet up with the Prime Minister Narendra Modi to hold talks post the Tech Summit. “Both PMs will have a number of issues to discuss and clearly PM Modi will want to know the impact Brexit may have on India. These are early days but I can tell you that this indicates that Britain wants to forge a stronger, fruitful and prosperous relationship than ever with India,” said Shailesh Vara, Conservative MP in the UK.
  • Ms May will also hold meetings with prospective investors.
  • The talks will include a possible Free Trade Deal between the two nations since Britain is planning to leave the EU.
  • She will visit the Garden City of India, Bengaluru, and meet up with the Karnataka CM Siddaramaiah. She will also be visiting the manufacturing plants in Bengaluru before flying back to London.

India-UK Tech Summit, 2016 

The Tech Summit 2016 brings together the most exciting thought leaders, businesses, educational institutions and innovators to connect and explore the future of India-UK collaboration. In the words of Prime Minister Narendra Modi, “The United Kingdom is known for its strength in technology and innovation, while India offers vast opportunities through its markets, skilled human resources and competitive economic environment. The UK and India are an unbeatable combination for enormously successful partnerships.” The Tech Summit will be a celebration of this unbeatable combination, providing a platform for new connections, business as well as to showcase future technologies.

Issues That India will face post-Brexit in the economic front

  • Trade between India and the UK will suffer a “double hit” as a result of the Brexit vote.
  • It will see about 800 Indian businesses operating in the UK facing the consequence, as many used the country as a gateway into Europe.
  • With the decline in pound, exports from India to UK will also take a hit. In fact, businesses in India will think twice before exporting to UK because of the loss of revenue.
  • India’s pharmaceutical industry, expected to be worth more than £40bn by 2020, is one that might struggle to make large investments in the UK after Brexit.
  • India’s largest carmaker, Tata, will also be sweating over negotiations between Britain and the EU. About 90% of its value is tied up in the UK-based Jaguar Land Rover, which is dependent on European supply chains and markets that might soon attract steep duties.
  • The only saving grace seems to be for those planning an acquisition in the UK. Anuj Chande, a partner and head of the South Asia group at Grant Thornton, said, “We’re seeing increasing interest to buy into food manufacturing and distribution, and in the technology space.”

The Issue of Visas for Indian Students

It goes without saying that PM Modi will expect a relaxation on the tightened regulations on student visas to Britain as a quid pro quo for the Free Trade Deal.

  • Only 11,000 visas have been issued to Indians as against 68,000 at the start of the decade.
  • However, from an Indian perspective, UK is no longer the prime destination for international education.
  • The students look forward to staying in the country they complete their higher studies from; but with the job market in Britain facing a crisis post-Brexit, the option of studying in UK seems less viable.
  • While Australia, Canada and the US top the list of countries that students prefer for higher education, UK has shown a drop as a preference, which further hampers the economy of the nation. An Indian student’s value to the education sector is to the tune of £20,000.
  • Thus, while the immigration norms are being tightened by the UK post-Brexit, India is also finding the prospect of sending students to the UK less lucrative.

The cloud of the aforesaid issues will definitely be hovering over the visit of the Prime Minister of Britain, Ms May. However, India will also be eager to show its support towards Britain at this time of crisis, and strengthening the bilateral relations between the nations outside the EU. “We stand by Britain at this time of crisis. That is what friends do,” said Acting High Commissioner Dinesh Patnaik at an SOAS event in London last month.

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