homeviews NewsLondon Eye | India could come off second best in UK free trade agreement

London Eye | India could come off second best in UK free trade agreement

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By Sanjay Suri  Dec 14, 2022 2:55:37 PM IST (Updated)

Some unease is building up that the new round of talks between India and Britain towards a new free trade agreement could leave India second best in any deal that emerges. All the signs visible so far point to a deal tilted to Britain’s advantage. 

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India has given ground clearly on the higher quotas and reduced tariffs on Scotch whisky – the one British demand that overshadows all others. There is no other British product, Scottish as it is, that the British government is more eager to push into the Indian market. India is the second largest importer of Scotch whisky by volume, but given the Indian thirst for Scotch this appears to Scottish distillers only the first few sips among more that must follow. 
Former prime minister Boris Johnson who got the trade talks with India off the ground repeated that demand for more and cheaper Scotch to flow into India on every occasion he could, including a visit to a gurdwara. Officials with some familiarity with the talks say this is a demand India simply had to accept – the talks could hardly have proceeded as far as they have without India giving in over this. 
Product for product, there is nothing that India can offer, or the British can seek, that could even fractionally parallel Scotch flowing the other way. Officials indicate concessions on import of Indian textiles as one trade-off India could gain. But no demand for Indian textiles or any other Indian product cries out in Britain as does that for Scotch whisky in India. 
Scotch is the biggest British brand India is opening to, but others have stepped in already, and an FTA could open doors for them wider. A British government statement at the start of the talks held up the success of British brands such as Pret A Manger, the somewhat elegant fast-food chain, that plans to open 100 outlets across India beginning in Mumbai. 
The UK statement pointed to the entry already of the Tide app, a business financial platform for SMEs, and the British banking services app Revolut, both recent entrants into the Indian market. No parallel emergence of Indian brands seems anywhere in sight within the UK.
The prime Indian demand for movement of more Indian professionals into Britain on better terms and for longer feeds into British growth stories for expansion into world markets, and to India itself. More Indian experts ‘exported’ to Britain under an FTA will inevitably be among those developing a range of British products that then sell to India itself. The biggest demand of the Indian government feeds into the British growth story, not India’s. 
The UK government statement points clearly in that direction. It quotes Andy Burwell, international director at the Confederation of British Industry as saying that India will be “an important partner and market as the UK looks to escape stagflation, attract skilled labour and deliver on the green transition."
Stagflation is a painful everyday fact in Britain. Growth is stagnant, inflation is soaring. The prime reason that the Bank of England has listed for the stagnation in growth is the collapse in the British labour market following Brexit. Britain has been recruiting busily over recent months for skilled labour in order to get back to growth. The self-declared aim of the British government through the trade talks is to attract labour. Incredibly for the British, the Indian government has made it an Indian priority to push towards the British what they are seeking, and getting, already. If trade talks mean a trade-off, as they must, it is not clear what Indian officials are even seeking to their advantage that could be deliverable and beneficial.
The British are seeking also a limitation to Indian manufacture of generic drugs through extending patents and profits for British pharmaceutical companies. The Indian business in patent-free manufacture of generic drugs is massive in itself, but it is also a lifeline to underdeveloped countries around the world through the life-saving drugs that it makes affordable everywhere. An Indian concession over this would be disastrous in more ways than one.
Officials are indicating that India may stand ground over this particular British demand. It will have to stand ground somewhere. India would have to be seen to refuse some demands, and Britain would have to be seen to fall short somewhere to give any agreement the appearance of credibility. Negotiations must necessarily bring tactical retreats to gain ground elsewhere. 
If the Indian government boast through any agreement becomes that some more trained Indians can go to Britain to settle for longer and perhaps indefinitely, a difference may begin to stand out sharply between what India gets out of an FTA, and what a few Indians get out of it. 
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