Partygate could play spoiler ahead of UK-India free trade deal

After two cancellations due to the Covid-19 pandemic, British Prime Minister Boris Johnson’s visits to India seemed jinxed: the third scheduled visit (April 21-22) almost didn’t happen, this time due to rows over ‘Partygate’.

Hours before he took off for India on April 20, Westminster was abuzz with claims that the visit was to be cancelled, when MPs were due to debate a motion on referring him to the Privileges Committee for allegedly misleading the House of Commons on parties in Downing Street (the motion was carried).

The visit went ahead in the end, but by all accounts, he felt the parliamentary heat from back home more than the heat in India during the visit. It was another example of an official visit dominated by the context rather than the text.

‘Partygate’ was the context in the short-term, but a slightly longer perspective reveals significant changes in the relationship between Britain and India in recent years, to the extent that experts believe that the overall relationship is now marked by an asymmetry: India is now more important to the UK than the UK is to India, in which the UK is pursuing India more than India is pursuing the UK. This was clear even before Johnson formed the government after the 2019 elections.

As prime minister, David Cameron made three official visits to India (in 2008, 2010 and 2013), while there was a gap of nearly a decade between Manmohan Singh’s visit in 2006 and Narendra Modi’s in 2015. The UK itself has changed due to Brexit, which led India to renegotiate and relook at the entire relationship. Until Brexit happened, the UK presented itself as India’s gateway to Europe, which is no longer true. It is also true that Britain’s new strategic tilt towards the ‘Indo-Pacific’ region with India as a key player would not have happened before Brexit.

For one, economic considerations now dominate Britain’s relationship with India, currently focused on reaching a free trade agreement; it was a key aspect of Johnson’s visit. Four of 26 chapters (trade areas) – described as ‘low-hanging fruit’ – have already been agreed upon, and both prime ministers have set a deadline of Diwali in October to complete negotiations in the other areas. Those close to the talks say India has never joined such ‘swift’ action on trade negotiations, even if the deadline appears too ambitious. A realistic outcome is an interim trade agreement later this year. Trade negotiations usually go on for years – the long drawn-out talks with the European Union are still nowhere near completion. There has long been talk in London of the ‘potential’ to drive trade between the two countries, but the reality is that Britain’s trade with smaller countries is much more – Belgium (£45 billion) or Ireland (£60 billion) – than with India, which has greater trade engagement with Germany, France, Australia, China or Russia.

Britain no longer produces many of the goods that India needs, as former Business secretary Vince Cable admitted some time ago. The figures are clear: the total trade in goods and services (exports plus imports) between the UK and India was £21.5 billion in the four quarters to the end of Q3 2021; total UK exports to India amounted to £7.7 billion, while total UK imports from

India amounted to £13.8 billion. India is the UK’s 15th largest trading partner, accounting for 1.7 per cent of total UK trade; FDI from the UK in India is nearly £15 billion (0.9 per cent of the total UK outward FDI stock), while FDI in the UK from India is £10.6 billion (0.6 per cent of the total UK inward FDI stock). In May last year, Johnson and Modi set a target to double bilateral trade by 2030; an overly keen Britain hopes the FTA will help drive exports in goods that currently attract high tariffs in India (such as spirits, cars).

For India, its growing economic clout means it can play a heavier hand at the political level in the relationship; for example, on the issue of anti-India elements raising funds or staging protests in London and Britain, or seeking easier mobility of professionals. Johnson already signalled during the visit that due to a severe shortage of skilled professionals in Britain, particularly in the IT sector, visa norms would be eased for Indians, mostly in the Inter-Company Transfer visa route that is mostly used by Indian companies with offices in the UK.

Besides setting the Diwali deadline for FTA talks, a key outcome of the visit was the political impetus given to the so far under-performing area of defence and security, including on ‘legacy issues’ and areas in which Britain has so far been unwilling to collaborate. Johnson announced support for new Indian-designed and built fighter jets, offering the best of British know-how on building aircraft, and supporting India’s requirements for new technology to identify and respond to threats in the Indian Ocean. Besides, to support greater defence and security collaboration over the coming decade, he announced an Open General Export Licence (OGEL) to India, reducing bureaucracy and shortening delivery times for defence procurement – Britain’s first OGEL in the Indo-Pacific region, which is expected to take-off despite some concerns in London over some dual-use items potentially reaching Russia via India.

For the new deal in defence and security to succeed, a high degree of mutual trust is needed, as Rahul Roy-Choudhury and Simran Brookes of the International Institute of Strategic Studies say: “Not surprisingly, the word trust features twice in the joint statement; in the defence and security as well as the trade sections. But trust can be a double-edged sword, with differing perspectives causing equally deep mistrust…This is important when both countries have ‘agreed to deepen co-operation, including by quickly resolving legacy issues…as trusted partners’. These remain complex and vexed issues relating largely to problems in the UK’s defence supply chain. Previous discussions on this have been characterised as akin to the making of a ‘jalebi’ that goes ‘round and round’.”

A lot happens between Britain and India as a matter of course that rarely makes headlines, thanks to their long history and the many levels of engagement (Enoch Powell once called the relationship “a shared hallucination”).

The fate of the many initiatives announced during the visit – gushingly by Johnson, reflecting another level of asymmetry – will also depend on his own fate in the Partygate row, but those with longer memories believe that the observation by former US secretary of state Dean Acheson remains as true today as when it was made in 1962, that “Great Britain has lost an empire but not yet found a role.”