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Prime ministers

UK Seeks Trade Deal with India, But Obstacles Lie Ahead

Strategic Insights

— 1 min read

British Prime Minister Boris Johnson will press Indian Premier Narendra Modi to ease tariffs on British whisky and cars, part of a plan to strike an interim trade agreement within a year. Johnson's visit to New Delhi this month aims to double trade with India to £50 billion by 2030. However, a government document notes that securing a comprehensive trade deal will be challenging, citing India's history of stalled talks with other countries.

Key Takeaways:

  • The UK hopes to increase trade with India to £50 billion by 2030, with a target to more than double the current trade volume.
  • India's priority demand is greater access to UK visas, which is expected to be a sensitive issue in negotiations.
  • The UK has a weak trade presence in India, with its share of imported goods and services falling from 6% and 11% in 2000 to 1.3% and 2.1% respectively over the past two decades.
  • India does not have a strong track record of delivery on trade agreements, having stalled talks with the EU, Australia, and New Zealand.
  • British companies like Vodafone are locked in disputes with Indian tax authorities, highlighting concerns over India's commitment to upholding international agreements.
  • The UK plans to negotiate a full Free Trade Agreement (FTA) with India, with an interim deal in place by March 2022.

Statistics:

  • The UK currently trades more with Belgium than with India.
  • India's share of the UK's imported goods and services fell from 6% and 11% in 2000 to 1.3% and 2.1% respectively over the past two decades.
  • Vodafone is embroiled in a dispute with Indian tax authorities, demanding €3 billion in back payments.
  • Devas, an Indian satellite company, was awarded a $1.2 billion settlement but is facing a winding up order from Indian regulators.
  • The UK hopes to double trade with India to £50 billion by 2030.

Sources:

  • "No 10 note on India Trade Policy" (a government document seen by the Financial Times)
  • The Financial Times
  • Various unnamed sources, including a person familiar with New Delhi's position and David Davis, a former cabinet minister.

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