By Prof. (Dr.) D.K. Giri
The new Foreign Secretary of Britain, David Lammy made his first visit to India on 24 July, soon after the British Labour Party came to power on 5th July. His maiden visit reflects the significance Britain attaches to India, more so, after it exited from the European Union. Likewise, Europe is increasingly interested in India; the popular perception being that it is looking at India as an alternative market and manufacturing hub to China. The usual question is whether New Delhi is equally warming up to both the United Kingdom and the European Union.
If we cast our attention back to history, especially to the post-World War II and the Cold War, India’s relations with both Britain and Europe were not so warm. Given the geo-political situation obtaining then, especially as India was decolonised from Britain, it was perhaps natural, as the popular perception was of suspicion against colonial Britain and capitalist Europe. India did make diplomatic contact in 1962 with then emerging European Economic Community;butit was not until 1972 when Britain joined the European Community that India could make any formal treaty with theEuropean Union. But, that is history.
The important lesson to learn by both Europe and India from that period is that there was a clear mismatch between politics and economy in their external relations – of both the European Union and the Union of India. While Europe was too occupied with economy without building the political profile, India was engrossed in politics without shaping its economy. The alarming theory was that the integration in European Union would be diluted if it was not building the political unity; likewise, New Delhi’s effort at playing a world role, from Nehruvian era onwards, was defeated by a weak economy. That mismatch seems to being corrected in the interactions between India, UK and Europe.
The brief history above should provide the backdrop for David Lammy’s visit and the recent developments between India and Europe. Lammy’s party had promised in its manifesto to expedite the signing of FTA with India. He said that “his trip to India reflects one of the new government’s top foreign policy priorities: reset with Global South”. His party also had announced that it wants to “reset and re-launch India-UK relations”. The former British Prime Minister Boris Johnson who restarted the negotiations on FTA had also said that India-UK relation was a key goal for Britain after its departure from the European Union in 2020.
In addition to pushing the momentum on FTA, David Lammy stressed on a deeper strategic and economic partnership with India. To layout the ground for such a partnership, he signed an agreement which foregrounds both countries to work together on crucial technologies, from critical minerals and artificial intelligence (AI) to semi conductors and telecoms. The agreement will also strengthen cooperation on issues like climate, trade, technology and education. Lammy said, “together we can unlock mutual growth, boost innovation, jobs and investment”. During the day, Lammy met Prime Minister Narendra Modi and National Security Advisor Ajit Doval.
To recall, the FTA deal aimed at doubling the two countries’ trade from its 2020 level of USD 50 billion to USD 100 billion by 2030. Prime Minister Johnson had promised to have a deal done by Diwali in October 2022.That was not to happen. Both countries held 13 rounds of negotiations without success. The talks were suspended as both countries held their general elections in 2024. While the trade deal is important and is likely to happen soon, both countries need strategies that go beyond the trade deal. This was the impression delivered by Lammy during his visit.
In parallel, strong initiatives are taken by Europe-India Centre of Business and Industry (EICBI), a European Parliament accredited organisation. EICBI is a geo-political forum that aims at fostering trade and enhancing relations with India and with India & UK & EU corridor. Members of Parliament from United Kingdom, India and European Union participate in its activities. It desires to tap the potential of more than 1.8 billion people consisting of 1.3 billion from India, 447 million in the European Union and 67 million in the United Kingdom.
EICBI is going to organise in September this year, the next UK-India Leaders Conference 2024, the 32nd summit in Europe to consolidate India-UK and India-EU engagements. The summit is focussing on two topics: India-UK FTA talks – where things currently stand and UK-India relations: navigating the bottlenecks. Such meetings and activities provide a first-hand understanding of the Indian markets and business opportunities in India for the UK/EU companies. Likewise, the visiting delegations from India have been able to understand the market in the UK/EU and the opportunities available in these regions.
Some of the past summits and activities that took place in 2024 include India-Finland Conference, Trivandrum, Kerala in April 2024, EU-India Leaders Conference in Mach 2024 in the European Parliament, Brussels, India-Cyprus Trade Conference at Kochi on 6 February 2024, UN International Day of Education at UK Parliament, London. The activities go back to 2011 when UK-Kerala Business meet took place at the UK Parliament. As a matter of numbers, 26 Members of Parliament from UK, 5 from European Parliament, 42 from Indian Parliament, 2620 companies have been involved in these activities.
All the above appears good so far. But there are constraints both in India-UK as well as India-Europe relations. In the FTA itself, the key outstanding issues are visa and mobility rules for skilled Indian professionals, social security contributions by Indian workers on improved access for UK services and goods, including electric vehicles and several food and drink products to the Indian market. New Delhi is also seeking exemptions from a UK carbon tax. India and the European Union are also negotiating an FTA.
India’s trade deals (FTAs) are strategically important to India-UK as well as European Union. India is the second largest source of foreign investment to the UK while Indian exports to the UK are six times that of Russia although less than USA and China. This should be the first FTA for the UK since Britain left the European Union. This could set the pace for UK to sign such deals with other Commonwealth countries. Similarly, if European Union wants to find a substitute to China which they consider a systemic threat, they will have to build India as a partner. Only India can match China in terms of size of the market and human resources.
To conclude, it is evident that India-UK relation is a major dynamic in India-EU transactions. Although Britain has formally left European Union in a controversial referendum, Britain and European Union relations will impact India and India-UK relations will influence India-EU partnership. That is why three entities – India-UK and EU are being taken together by EICBI and other lobbyists and pressure groups. That trend is reflected in the title of this article. —INFA
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