UK’s relationship with India is in decline, yet the British government seems rather keener on aggravation, rather than rejuvenation.
LONDON: It has been two years since the Leave campaign promised that Britain would “take back control”. Yet we are further from control than we have ever been. Brexit policy has been devoid of genuine planning, forethought or ideological substance.
The three red lines have been set: leave the EU customs union, leave the single market, and no longer subject ourselves to EU laws or rulings of the European Court of Justice. In other words, we are heading for a Hard Brexit.
An inadequate approach to the Northern Irish border question leaves uncertainty on that front, and similarly businesses have huge unanswered questions of their own. Recently, the British Chamber of Commerce shared 24 “real-world” questions that its business community wants the UK government to respond to.
Our EU negotiating counterparts are becoming impatient with the lack of progress towards an agreement and threaten to throw out the government’s Brexit white paper, which is due to be drafted following the recent crucial Cabinet meeting in Chequers.
An acrimonious departure from the European Union is almost certain. The EU is the UK’s largest trading partner, accounting for 50% of its trade, and almost a further 20% of UK trade covered by Free Trade Agreements (FTAs) with countries like Canada and Japan.
Yet, if we follow the path laid out by the Prime Minister’s red lines, the UK will lose these advantages, as well as to form ties with countries such as India, that are negotiating an FTA with the EU; a EU-India FTA is far more important to India than a UK-India FTA.
As Founding Chairman of the UK-India Business Council, I have continually championed the UK-India relationship, and the UK’s strong partnership with India will be vital in the years ahead.
Currently, the UK conducts more trade with Sweden than India—the fastest growing and fifth largest economy in the world. India has overtaken the UK economy in terms of size, and India also has one of the larger and fastest growing sources of international students in the world. We have a long way to go if we are to bridge the gap between our current levels of trade and where they should be.
Yet just when it needs its historic friend the most, Britain risks being left behind as the rest of the European Union charms India. Whereas the EU27 are continually ramping up their economic ties in India—with EU-India trade tripling since 2000—the value of UK exports and imports has remained largely static.
The UK’s share of EU-India trade has dropped from 29% in 2000, to 10% in 2016. Far from being an impediment, the EU is trading with India more than ever.
This country’s relationship with India is in decline—bilateral trade dropped 26% between 2015 and 2016 —yet the government seems rather keener on aggravation, rather than rejuvenation. This government can do much more to show it is committed to strengthening ties with India which has always been a special ally.
Firstly, FTAs are not just about tariffs and duties, they are about movement of people too: skilled workers, entrepreneurs, business tourists and international students.
The recent decision to snub India from the decision to relax Tier-4 visa rules for certain countries has proved disastrous. It has repeatedly been made clear that India views the flow of trade and of people as inextricably intertwined. The visa snub is the just latest incident in which the government has shot itself in the foot.
Sajid Javid’s appointment as Home Secretary—the first UK Home Secretary from an ethnic minority background—provides some hope that the government will replace its hostile approach to immigration with a more compliant one.
This needs to happen urgently—over the past six years, the number of Indian students has more than halved to 16,000 in the UK. Quite simply, Britain is losing out in the global race to attract international students to competitors such as the United States, Canada, Australia and other European countries, such as France.
In order to truly compete, the government must re-introduce the two-year post-study work visa. This will enable international students to work in the UK after graduating, earn money to pay for their education, make lifelong connections, and contribute to the Exchequer.
India will not be the sole remedy for our Brexit-induced ills. It boasts only nine free-trade deals, not one of them with a Western country. In any case, we stand behind the European Union in the queue; it would be extraordinarily naïve to think otherwise.
On 29 March 2019, Britain will become what EU treaties define as a “third country”. If we are to thrive outside of this union, we must make use of our historic friends. India boasts a rocket-fuelled economy and a country bursting with talent; we must rise above petty politics and forge a partnership that works for us both.
Lord Bilimoria is founder and chairman of Cobra Beer and founding chairman of the UK-India Business Council.