A trade deal between the UK and India isn’t guaranteed any time soon – and this is why
With his heritage and large extended family in the country, Prime Minister Rishi Sunak will receive a warmer welcome than most of the other world leaders arriving in India this weekend for the G20 summit.
Unfortunately though, a free trade agreement between the UK and India is not guaranteed any time soon.
Last year, India leapfrogged the UK to become the world’s fifth-largest economy – and in April, overtook China to become the world’s most populous country.
Its growing prosperity makes it a country that the whole world wants to do business with. Before long, it is likely to be the third biggest economy globally after the US and China.
A free trade agreement with India was, in particular, held out as one of the great potential prizes of Brexit. Boris Johnson described a free trade agreement with India, if achieved, as “the biggest of them all”.
India is already the 16th-biggest destination for British goods exports – ahead of South Korea, Turkey, Sweden, Australia and Saudi Arabia and on a par with Canada – and that is only expected to grow.
With the UK a predominantly services-oriented economy, though, it is services that promises the greatest opportunity.
The value of the UK’s services exports to India are already close to the value of its services exports to Japan, Italy and Hong Kong.
In all, Mr Sunak’s aim is to double trade between the UK and India – currently worth some £36bn – by 2030.
At present, though, a deal remains elusive.
This is partly because Mr Sunak is thought to want a more comprehensive and far-reaching agreement than has so far been on offer.
Trade Secretary Kemi Badenoch
Both he and Kemi Badenoch, the trade secretary, are thought to believe that a shallow deal – of the kind that could have been achieved by now – would make it harder to come up with a deeper deal in future.
But it is also because a number of sticking points remain. The most obvious is India’s desire for the UK to make more visas available for its students and employees of Indian companies, particularly its software businesses, which are among its biggest exporters.
This adds a layer of complexity because one of the biggest beneficiaries of such an agreement could be Infosys, one of India’s biggest software and outsourcing companies, which was founded by Mr Sunak’s father-in-law and in which his wife retains a significant shareholding.
Yet visas appears to be a red line for Mr Sunak, as the PM’s spokesperson made clear this week: “The prime minister believes that the current levels of migration are too high.
“To be crystal clear, there are no plans to change our immigration policy to achieve this free trade agreement and that includes student visas.”
For the UK, the key priority is for India to reduce its tariffs, which are seen as among the world’s most protectionist. Just 3% of UK exports to India are tariff-free – while by contrast, about 60% of Indian exports to the UK incur no tariffs.
Some of the UK’s biggest exports are heavily taxed, most famously Scotch whisky, which attracts a 150% tariff.
Another stumbling block, as negotiations between the two countries enter a 13th round, is India’s approach to intellectual property.
One of India’s biggest exports is generic drugs – sometimes described as “copycat” drugs – cut-price versions of medicines that were once protected by patent, but which are no longer.
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Rishi Sunak and India’s Prime Minister Narendra Modi meeting in Indonesia last year
The UK, with its rich history of scientific innovation and which boasts one of the world’s most dynamic pharmaceuticals sectors, wants longer patent protection for drugs than India provides under its existing trade agreements.
India argues this would make medicines unaffordable to a big chunk of its population.
Mr Sunak can console himself with the thought that Britain is not the only one struggling to conclude a free trade agreement with India.
The EU is understood to be deeply frustrated at the length of time it is taking to negotiate with a notoriously tricky partner.
But the danger is that, with elections due in both India and the UK during the next year, a free trade agreement could yet be kicked into the long grass.
Baroness Michelle Mone has broadened her attack on her political critics, accusing Conservative leader Kemi Badenoch of using “inflammatory” and “reckless” language that could prejudice a police investigation into her role in the awarding of PPE contracts.
A day after she wrote to Sir Keir Starmer, accusing the government of pursuing a vendetta against her, the former Conservative peer responded to comments by Ms Badenoch following a High Court ruling that a company linked to Baroness Mone’s husband must repay £122m received for surgical gowns.
The court found that PPE Medpro, founded by her husband Doug Barrowman, was in breach of contract with the Department of Health and gave it two weeks to repay the sum.
While not a director of the company, Baroness Mone used her political contacts to introduce PPE Medpro to the government’s “VIP fast-lane” at the start of the pandemic, and a family trust of which her children are beneficiaries received £29m of the profits.
A separate criminal investigation by the National Crime Agency (NCA) is ongoing, and assets linked to the couple worth £75m have been frozen while it continues.
In a series of radio interviews, Ms Badenoch criticised Baroness Mone, accusing her of bringing shame on the Conservative Party and calling for her to step down from the House of Lords.
“Where people do wrong, they should be punished,” she said. “They should face the full force of the law and this is something that I very strongly believe in,” she said.
“And as the prosecution against her continues, they should throw the book at her for every single bit of wrongdoing that has taken place.”
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Baroness Mone ‘should resign’
In a letter from her private office, Baroness Mone accuses the Tory leader of being ignorant of the facts and calls out a series of other Conservative politicians who introduced companies to the VIP lane.
“I was shocked to the core to read about your inflammatory language on BBC Radio yesterday calling for me to resign from the House of Lords,” she writes.
“You are commenting on a live criminal investigation that could prejudice the outcome of any trial, and in so doing, you are reportable to the attorney general for breach of and contempt of court. Does no one ever tell you these things before you and your colleagues make reckless statements in the public domain?”
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Baroness Mone goes on to say the NCA investigation has “nothing to do with PPE Medpro and the contracts”.
“The case theory of the NCA investigation is that I somehow misled the Conservative government about my alleged concealed involvement and ended up pocketing a lot of money,” she writes. “Well I’m sorry to disappoint you, but it isn’t true.”
She also says the Conservative government knew of her involvement and names former health secretary Matt Hancock, Lord Agnew, Lord Feldman and Lord Chadlington as being among 51 “mostly Conservative peers and MPs” who introduced providers to the VIP lane.
“So Kemi, my role was exactly the same as all other Conservative MPs and peers who were trying to help provide PPE… if I have done wrong, then so have all the others in the VIP lane. In which case, you should be calling out for them to resign as well. That’s if you manage to work out what it is they are supposed to have done wrong.”
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The High Court says a company linked to Mone breached a government contract of nearly £122m
She concludes by saying she has no wish to rejoin the Lords as a Conservative peer when her leave of absence ends, “that’s assuming there still is a Conservative Party before the next General Election”.
The letter comes as an online petition calling for Baroness Mone to step down from the Lords, launched by the Covid-19 Bereaved Families for Justice, attracted 60,000 signatures in 24 hours.
The Conservative Party has been approached for comment.
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