UK, India must chalk out a fresh trade deal

The High Court ruling that a parliamentary nod is required to trigger Article 50 — the formal procedure for the UK to leave the EU — may have come as a shock for the British government, but Prime Minister Theresa May has said that her government was confident of winning the appeal against the verdict in the Supreme Court and assured the EU leaders that the Brexit timeline will remain unchanged.
May is following up the government’s confidence and her assurance with a business trip to India — the world’s fastest growing major economy. This trip assumes significance as it is the first that May is undertaking outside Europe since the Brexit vote. It will apparently send a message to those in doubt over Article 50 that the UK government is pretty much on course.
As the UK is set to enter a new economic era and India seeks to boost its GDP further, enhancing economic ties will be mutually beneficial for both the countries. The UK accounts for 15% of India’s total merchandise business. It is the third largest inward investor into India, with cumulative FDI equity investments of $22.7 billion. Likewise, India is the third largest foreign investor in the UK. The bilateral trade between the two countries stood at $14 billion last year and their historic bond should help them look for accords that solidify their economic
cooperation. The two are yet to tap full business potential in sectors like science and technology, finance and infrastructure investment.
Thrust to business will need a fresh India-UK free trade deal. Although the UK can’t enter into trade agreements with any nation until it leaves the EU, Britain has to start doing groundwork for pacts that it would need post-Brexit to shore up its economy. As May meets India’s Prime Minister Narendra Modi today, they should prod each other to forge a trade agreement on terms that both are compatible with. The two will have to find a common ground and remove the trade irritants.
Bilateral ties can flourish only when there is a win-win situation. In case of India and the UK, future partnerships and shared interests are many. But these have been bogged down by logjams.
The EU-India free trade deal initiated in 2007 is still in limbo. May and Modi have to see what the sticking points were and plug the loopholes to chalk out a new UK-India free trade accord that is flexible and pragmatic.
Britain’s strongest sectors are accounting, insurance, banking and legal services. It wants India to lift restrictions on them as also on barriers to foreign
imports. India, on the other hand, wants Britain to relax visa restrictions on professional workers and Indian students wanting to stay on after completing university courses. While India could make concessions in foreign import restrictions, it would be an uphill task for Britain to ease the visa restrictions as immigration is a sensitive issue among UK voters. Much depends on how May handles the matter.
The Confederation of Indian Industry has said that a bilateral agreement between the UK and India “would be almost made in heaven”. But for that, Britain and India will have to negotiate and find a new way to break the trade bottlenecks. India’s
investments in the UK are more than that combined in the entire Europe. Similarly, for Britain, the rapidly growing Indian market can open floodgates of trade avenues. And with UK’s departure from EU soon, it needs partners like India to bolster its market confidence. May’s India visit offers a huge opportunity to bridge the past gaps and build a mutual trust on which trade thrives in the future.