India and the UK have had a shaky economic partnership, given their historical contexts
UK Prime minister Boris Johnson has added momentum to the trade agreement negotiations between the two countries. In March, India and UK officials concluded their second round of negotiations on the proposed Free Trade Agreement. The third round of negotiations will have some officials from UK travelling to Delhi in the last week of April and others joining virtually. The pace of progress of recent trade agreement negotiations between India and the underscores the importance of agile and technologically future-fit for governments in the current work environment. India has recently concluded two mini-trade agreements with UAE and Australia within a year of the announcement. The UK on its part has concluded FTAs with Japan and renegotiated its deal with EU. Most of these trade agreements for India and UK with their respective economic blocks have been concluded during the pandemic years of 2020 and 2021. India and the UK have a shaky economic partnership, given their historical contexts. An independent India has never been able to completely shed the hatred towards its erstwhile coloniser, while many powerful lobbies in the UK haven’t been able to give up their “rulers of the region”attitude. The political relations between both have punctured pursual of any significant economic cooperation, even though, both sides maintained a fairly upwardly mobile bilateral trade relation. The colonial ghosts from the past including geopolitical issues such as Kashmir, Pakistan and Partition always shadowed any bilateral economic ties. The UK, aftersevering ties with the European Union andfacing threats to its liberal economy from China, decided to steer its focus towards the Indo-Pacific for strategic and bilateral reasons. It has already entered into amilitary alliance with Australia along with the US (AUKUS)that focusseson security in theregion.The growing closeness between China and Russia, along the current aggression in Ukraine has forced the UK to make the Indo-Pacific a key element of its foreign, trade, political and economic agenda. The only country from the QUAD group with whom the UK doesn’t have a significant economic partnership such as a tradeagreement is India.A trade deal with the aim to double bilateral trade between India and UK to about $100 billion by 2030 seems a focus area for “Global Britain”.
India has been dragging its feet on pulling together an economically beneficial trade agreement for nearly a decade. This was primarily a result of its FTAs with ASEAN group and Korea, both of which have competitive rather complementary domestic services and goods, on which limited trade benefits could be achieved by India. A bunch of reforms in India such as the GST regime, cashless toll access, and single-window clearances needed some years of careful alignment of domestic policies with global best practises, before India could boldly negotiate trade agreement terms with new partners. India has shown interest to quickly round up couple of lucrative deals with EU, Canada, Israel and the Gulf Cooperation Council besides the UK. Every mini-deal or full-fledged free trade agreement would be stepping stone for the next one in line. India did get a taste of negotiating on sensitive matters such as access to agriculture and dairy products, wine and spirits,etc., when it closed the Economic Cooperation and Trade Agreement with Australia last month. The UK is a powerful player from the European region with centuries of history of having excelled in trade negotiations. Already business centres from the UK have red flagged “Ease of Doing Business” as key to any proposed India-UK trade deal. This will have to be looked into carefully and significant alignments with benchmarked global practices will have to be done.
(The writer is a policy analyst. The views expressed are personal.)