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Theresa Villiers
The Government’s big trade mission to India will be widely welcomed, given the huge opportunities presented by increased trade links with that country.
The trade agreement signed by India and the UK in July was described as “a landmark deal” by Sir Keir Starmer, and “a historic milestone” by his Indian counterpart, Narendra Modi.
The deal as a major win for both countries and I congratulate the two Prime Ministers on achieving it. It builds on work started by the previous Conservative Government and it’s a glimmer of hope in a world where protectionism is on the march. The treaty is a significant Brexit benefit, the EU having yet to secure a deal with India, despite nearly 20 years of talks.
The treaty is the most comprehensive free trade deal ever entered into by India. It’s an important milestone for the country in its journey away from the heavy bureaucratic controls that stunted its growth rates until it embarked on a more liberal economic path in the 1990s, an approach subsequently turbo-charged by the Modi Government.
The successful conclusion of this long, complex and difficult negotiation by the two partner governments is in marked contrast to the weaponisation of trade policy by President Trump. Much as we all want to deprive President Putin of oil revenues, the US slapping further punitive tariffs on India is unlikely to be a solution.
The UK-India deal should deliver lower prices for range of consumer goods here, including clothing, footwear and food.
India is one of the world’s most populous countries with a rapidly growing middle class. It is the fastest growing economy in the G20 and is widely expected to become the third largest economy in the world within three years. Access for British exporters will be greatly improved via reductions in 90% of India’s tariff lines.
UK business will have access to India’s £38 billion procurement market for the first time ever. Car tariffs will come down from 100% to 10% under a quota system.
Crucially, India’s 150% tariff on whisky will be halved when agreement comes into operation, falling to 40% within ten years. Whisky is one of the UK’s most valuable exports. As a former Defra Secretary, I know the sector has been pushing for years for better access to India as the world’s biggest whisky market. I am not therefore surprised that the Scotch Whisky Association has called this deal “transformational”.
Agriculture is almost always the most difficult issue to resolve in trade negotiations, with concerns about food security and rural prosperity meaning farming is rightly treated as a special case by almost all countries. In this instance, the UK’s high food standards have been maintained; and certain sensitive sectors, such as pork, chicken and eggs, have sensibly been excluded from trade liberalisation – meeting a key ask from UK farming groups. A reasonable balance seems to have been struck.
Strengthening ties with India has broader geo-political advantages as well economic ones. The country will have a critical part to play in addressing climate change and biodiversity loss, not least because of the leadership role it provides for the Global South.
Just as important, India can provide an attractive supply chain alternative to China. As pointed out by Parliament’s Intelligence and Security Committer, there is an urgent need to reduce our economic dependence on China. This trade agreement can help us do that.
This year’s outstanding test series was a reminder of the strong cultural ties that bind the UK and India together. Our shared history leaves us with a common language – English is one of India’s official languages, and has a central role in business, education and government. And the two countries’ traditions of parliamentary democracy and a common law legal system rest on shared foundations.
Around 1.9 million people in Britain have Indian heritage – a highly successful and thriving community that can act as our living bridge to the subcontinent and help us seize the opportunity to boost our trade with the world’s biggest democracy.
