Does Brexit offer an opportunity for UK-India trade?

Britain has slipped from 2nd to 17th among India's trading partners over the last 20 years.

by Johnny Aldred
Last Updated: 07 Nov 2019

It’s perhaps fitting that India’s prime minister, Narendra Modi, was the one to congratulate Boris Johnson on England’s dramatic third Ashes Test win against Australia when they met on the sidelines of the G7 summit, given the potential benefits a closer relationship with India could bring the UK after Brexit.

While India is currently experiencing an economic slowdown – Moody’s recently downgraded its GDP growth forecast for 2019 from 6.8 to 6.2 per cent – the country is still the world’s seventh largest economy, with a GDP of $2.72tn (2018) and a population of 1.3 billion.

Trade between the UK and India is already strong, albeit on European Union terms, totalling €13.6bn in 2018 and accounting for 17 per cent of India’s overall trade with the EU. Between 2002 and 2018 the value of this trade grew at an average annual rate of 8.8 per cent.

But, according to a report from the foreign affairs select committee, the UK has fallen behind other countries in its share of India’s trade. Describing the UK’s neglect of its ties with India as an "expensive missed opportunity", the report Building Bridges: Reawakening UK-India Ties noted that Britain has slipped from being its second largest trade partner in 1998-99 to 17th in 2018-19.

The EU has been trying to negotiate a free trade agreement with India since 2007, with no conclusion in sight – although three years of Brexit negotiations have dented those ambitions. Opinions vary as to whether the UK can fare better in hammering out a deal by going alone.

While the UK will have (arguably) more freedom to offer more tightly focused terms with more favourable tariffs, it may not land well if Britain can no longer provide access to EU markets. And while a post-Brexit UK could also need the many high-quality workers, such as engineers, doctors and technicians, that India can offer, this could be politically difficult for a UK government that has delivered a Brexit predicated on a much tougher stand on immigration.
In fact, India’s government has already made it clear that it will be in no rush to reach a trade deal with the UK without significant concessions on movement of people.

In India, Britain is seen as a world leader in education, health, culture, infrastructure, science, technology, policing and intelligence. It could be here, rather than simply in economics and trade, that a future relationship between Johnson’s and Modi’s governments might flourish. Maybe a shared love of cricket will help.

Image credit: Drew Angerer/Getty Images

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