India gets to the moon but hurdles remain for UK-India trade deal

On a momentous day for India as it becomes only the fourth country to land a spacecraft on the moon and the first to touch down on the south pole, the last thing on anyone’s minds will be the UK-India trade deal. But it will be all Kemi Badenoch is thinking of as the trade secretary flies to Jaipur today for a summit with her G20 counterparts.

The UK-India trade deal has been on the table for some time. Last year, Sunak’s predecessor-but-one promised to have a deal wrapped by Diwali – and here we still are. But talks are heating up ahead of Rishi Sunak’s visit next month. It is said that the deal is high up on both Sunak and India’s Prime Minister Narendra Modi’s lists of priorities. 

But, according to government sources, a deal is still some months off and there are some “big nuts to crack” before completion. Whitehall is stressing that an “agreement in principle”, similar to the one the UK signed six months before the completion of the Australia and New Zealand trade deal, may be all Sunak can hope for at next month’s visit. 

So what are these “big nuts” and what do both countries want from each other? 

The UK wants triple-figure import taxes – tariffs – brought down, primarily on cars and whisky. Additionally, Badenoch wants easier travel and fewer restrictions for British businesses – mainly in the service economy – setting up in India. 

William Bain, head of trade policy at the British Chambers of Commerce told the BBC:  “Up to 80 per cent of the UK economy is services-based.” Consequently, easier travel and fewer restrictions for British businesses in India would be a huge win. 

When we come to what India wants, there seems to be more of an impasse. India wants better access for Indian manufacturing and services in the UK – despite Tata just investing £4b in a gigafactory in Somerset – but also more work visas. 

When asked last October about her resistance to the deal, home secretary Suella Braverman told The Spectator: “I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit.”

This was in response to statistics showing that Indians overstayed their visas more than those from any other country. Around 20,000 of 470,000 Indians – 4.4 per cent – overstayed their visas in the year to March 2020. 

Yet there is no question this is a valuable deal. And with the ever-elusive trade deal with the US off the cards for now, some think this could be a fine replacement. According to government figures, the deal could increase the UK’s GDP by “around £3.3bn in 2035”.

Any agreement is still some way off. Indeed, the success of this deal depends on what those in charge feel the electorate voted for at Brexit: Badenoch and Sunak’s “Global Britain” or Braverman’s Britain of limited and points-based migration? It seems the Conservative party has yet to understand that Brexit was a vote for both.