India-UK Relationship | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Introduction

• British Prime Minister Boris Johnson was on two-day India visit. Becoming the first British PM to visit Gujarat since 1947, Mr. Johnson was received by Gujarat Chief Minister Bhupendra Patel and Governor Acharya Devvrat. 
• Looking at his engagements in Gujarat through the day: the first place he visited upon his arrival was the Sabarmati Ashram, where he paid floral tributes to Mahatma Gandhi. And if you followed the news through the day, you wouldn’t have missed images and visuals of the British PM trying his hand at spinning the charkha. 
• Next on his itinerary was a meeting with industrialist Gautam Adani. As per news reports, discussions between the two revolved around how the Adani Group and British companies can collaborate to co-design and develop aerospace and defence technologies as part of the Atmanirbhar Bharat initiative.

India-UK Trade

• India has had strong historical ties with the U.K. and currently, it is one of India’s most important trading partners.
• It is a significant partner of India as an FDI investor.
• Similarly, the U.K. is one of the largest investors in India, among the G20 countries.
• India has engagement with the UK in sectors like pharma, textiles, leather, industrial machinery, furniture, and toys.
• India is also looking to the UK to support it with technology-based products such as high-quality cameras, medical devices, and automobiles.

Close relations

• India-U.K. links are substantial. One and a half million persons of Indian origin reside in Britain, 15 of them are Members of Parliament, three in Cabinet and two holding high office as Finance and Home Ministers.
• Before COVID-19, there were half a million tourists from India to Britain annually and twice that figure in the reverse direction.
• Around 35,000 Indians study in Britain despite restrictive opportunities for post-graduation employment.
• Britain is among the top investors in India and India is the second-biggest investor and a major job creator in Britain.
• This will help to envision closer military ties, cooperation in Indo-Pacific strategies, counter-terrorism and fighting climate change.
• Corona pandemic and cooperation for vaccine manufacturing – The highlight of India’s relations will be closer cooperation on the coronavirus vaccine.
• India’s Serum Institute set to produce and distribute the Oxford/AstraZeneca vaccine in India, and then as part of the COVAX project to other developing countries.

Significance

• Brexit: The UK has been pushing India for a bilateral trading arrangement ever since it voted to leave the European Union (EU) in June 2016 and left finally in January 2020.
• However, India had been resisting these efforts as it decided that the Brexit process should complete first.
• India has been keen to understand how much of a “special and preferential” access the UK will get in the vast European market when it is out of the EU’s single-market dynamics.
• Strategic Partner: The UK is a permanent member of the UN Security Council, and one of the strategic partners of India.
• Strengthening bonds with the trade would seek UKs support at global issues like standoff with China in the Ladakh sector of the Line of Actual Control (LAC) and claim for permanent seat at UNSC.
• Review of Trades: India could seek a review of trading agreements including renegotiating tariffs on some items along with the tightening of provisions governing country-of-origin certification.
• UK is a populist nation advocating ‘make my country great again’ and ‘my country first’. Their brand of democratic politics is self-centered and impervious to criticism.
• Britain has now delivered one that is tariff- and quota-free and allegedly “takes back control over our money, borders, laws, trade, and our fishing waters,” but has potential for friction both with the EU and domestically.
• Modi visited the U.K. in 2015 when six major agreements were concluded.
• It is unlikely that any assessment has been made of the implementation of those accords, but in contemporary diplomacy, it is common for a raft of new treaties to be superimposed on existing ones even where there is insufficient progress.
• India has been fruitlessly negotiating a trade agreement with the EU since 2007, during which Britain was considered the main deal-breaker.
• The EU wanted duty reductions on autos, wines and spirits and wanted India to open financial sectors such as banking and insurance, postal, legal, accountancy, maritime and security and retail. India, as always, sought free movement for service professionals.
• The same obstacles with post-Brexit Britain will arise, because the export profile of both countries is predominantly services-oriented.
• In response to free movement for professionals, Britain will refer to its new points-based system for immigrants, while after withdrawing from the Regional Comprehensive Economic Partnership, India is cautious about negotiating any new trade agreement, and will place greater stress on aspects related to country of origin and percentage of value addition in exports.
• Therefore, when the time comes for a discrete agreement with Britain, the two countries may settle for a limited one perhaps covering pharmaceuticals, financial technology, chemicals, defence production, petroleum and food products.

Way Forward

• India is one of the fastest growing large economies of the world and FTA with the UK has played a significant role in enhancing the trade volume of the country.
• However, according to policymakers, FTAs signed by India with the UK have not brought the expected tangible benefits and, on the contrary, have hurt the country’s manufacturing sector due to liberal rules of origin.
• Therefore, there is a need for a detailed assessment of FTAs in terms of goods, services and investment flows by all the stakeholders involved.

Conclusion

There is a every chance that the connections between India and the UK could create one of the most important and positive relationships of the 21st Century.