What India gains from revitalised ties with UK
India’s May 4 virtual summit with the UK is seen as a breakthrough engagement. The Roadmap-2030 is, perhaps, overambitious. It needs to be remembered that it is a part of a larger continuing engagement. The significant enthusiasm of the UK arises from Brexit and its need for new partnerships. Since the UK is adopting a wider worldview, pivoting to Asia, it is time to have a new measure of the India-UK partnership.
Among the earliest initiatives of the UK this year was to re-engage with India. Boris Johnson was to be the chief guest at the Republic Day this year, which was, unfortunately, cancelled due to the pandemic. At the time, Britain applied to join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). It also persuaded ASEAN to give it a dialogue partnership separate from the EU. This is coveted by many European countries, but only Britain has managed to get it.
The fields in which India and the UK now want to intensify their relationship include defence and security, trade and investment, people-to-people engagement, climate change, and the pandemic. It is important to understand what India would get from this revitalised relationship. Where defence and security are concerned, the presence of the British Navy in our region and more frequent exercises are of limited significance since the UK has been unable to get China to abide by its agreement on Hong Kong. Their importance is the readiness of the UK to provide defence technology, share intelligence and participation in the Information Fusion Centre which contributes to FOIP (Free and Open Indo-Pacific).
Defence technology for the LCA and next generation of air defence ships is important since the Rolls Royce MT30 engines have proven themselves and are used in the Indo-Pacific. HAL and UK Rolls-Royce have expanded their partnership for collaboration to augment the supply chain for both civilian and defence aerospace by establishing a maintenance centre for Adour Mk871 engines to support Rolls-Royce’s global customers. These could be a game-changer for indigenous production of aircraft and ships in India.
Britain is not a major trade partner of India. An FTA needs to be carefully crafted to ensure that services and social mobility are adequately covered. These were among the issues which led the UK to seek Brexit. These will remain points of concern for India.
The UK proposes to provide 3,000 work visas for Indian professionals for two years as part of the mobility and migration agreement. The price that is being paid for it is that India has finally agreed to readmit people that Britain thinks are illegally residing there. In the past, this has been a major sticking point because the verification of the nationality of these ‘illegal’ people, mainly from Punjab, could not be carried out. The Indian position has been that unless the verification of nationality is confirmed, they would not be readmitted. Their numbers are considerable and not being mentioned in the public domain could impact implementation. The professional visas will be available a year from now.
The Education Partnership is important because many Indians still consider the UK a prime destination. When the UK made visa and costs more stringent, students turned to Germany. The UK would like to reclaim the Indian student market and try and make things easier. Many of the professional visas would, perhaps, go to the Indian students in the UK.
The UK has publicly announced a 1-billion-pound trade and investment deal with India. A quarter of that is the investment by the SII in a new vaccine production facility in the UK. This looks like a ‘cut direct’ since India would have liked an expansion in India itself.
The FDI relationship between India and the UK is quite imbalanced. India is the second largest job creator in the UK, through its FDI. Twitter is agog about an FDI for butter chicken, which would create jobs in the UK! The converse about Indian gains from the UK is not publicised.
The question remains: what would India get out of the trade and investment engagement? Most UK investment in India, which is far behind that of Japan, Germany and others, is largely from the people of Indian origin. Will India benefit from a wider FDI, which will support Atmanirbhar Bharat and create manufacturing jobs in India?
The worth to India of the investment relationship with the UK is in the services sector and new technologies. Among these are climate change and health-related aspects. Green technology upgrades for existing manufacturing technologies in India could be useful gains for India.
The pandemic has created new opportunities which need to be better grasped. The UK is positioning Oxford-AstraZeneca-SII as a model, which could be replicated with British R&D and investment-supported manufacturing in India. If each of these initiatives leads only to reverse FDI into the UK, then interest in the FTA could falter.
There are some tripwires. The India-UK relationship relies on the Indian diaspora as a supporter of economic partnership with India. Elements of the diaspora do try to embarrass India in the UK Parliament and outside by invoking domestic Indian issues. This is not going to go away and domestic UK politics will continue to use Indian issues as and when required. The UK needs to be sensitive to this.
Another area of concern is the ease with which Indian economic fugitives find it easy to stay in Britain. This is different from the strategic partnership with the UAE, which led to the extradition of several wanted people. The UK needs to realise the value of such actions.
Issues of retrospective taxation and non-fulfilment of arbitral awards, like in the cases of Vodafone and Cairns, evoke UK reaction. UK officials have indicated that the nature of doing business in India will depend on the resolution of these problems. Such elements may trip the relationship because these are important issues domestically for India and their public impact is deep.
