Sansad TV: India-UK Relationship | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

• During his two-day visit to India, British Prime Minister Boris Johnson made a historic visit to Gujarat, becoming the first British PM to do so since 1947. Upon arrival, he was warmly received by Gujarat Chief Minister Bhupendra Patel and Governor Acharya Devvrat.
• Johnson's itinerary included various engagements in Gujarat, starting with a visit to the Sabarmati Ashram, where he paid his respects to Mahatma Gandhi and even tried his hand at spinning the charkha. Later, he had a meeting with industrialist Gautam Adani to explore potential collaborations between the Adani Group and British companies in aerospace and defense technologies, aligning with India's Atmanirbhar Bharat initiative.

India-UK Trade Relations

• The United Kingdom has a longstanding and significant relationship with India, serving as one of its most important trading partners.
• It holds considerable importance as an investor in India, attracting foreign direct investment (FDI). Among the G20 countries, the UK ranks as one of the largest investors in India.
• The two countries have active engagement in various sectors, including pharmaceuticals, textiles, leather, industrial machinery, furniture, and toys.
• Additionally, India looks to the UK for support in technology-based products such as high-quality cameras, medical devices, and automobiles.

Strong Relations

• The relationship between India and the United Kingdom holds significant importance. Over 1.5 million people of Indian origin reside in Britain, with 15 of them serving as Members of Parliament, three in the Cabinet, and two holding high offices as Finance and Home Ministers. Prior to the COVID-19 pandemic, half a million tourists would travel from India to Britain annually, with double that figure in the reverse direction.
• Despite limited opportunities for post-graduation employment, around 35,000 Indian students pursue their studies in the UK. Both countries have substantial investments in each other, with India being the second-largest investor in Britain and a major job creator, while the UK remains a top investor in India. This close relationship sets the stage for enhanced military ties, cooperation in Indo-Pacific strategies, counter-terrorism efforts, and joint actions to combat climate change.

COVID-19 Cooperation

• A significant aspect of India-UK relations is closer cooperation regarding the coronavirus vaccine. India's Serum Institute is poised to produce and distribute the Oxford/AstraZeneca vaccine within India and through the COVAX project to other developing nations.

Brexit and Strategic Partnership

• The UK's decision to leave the European Union (EU), known as Brexit, has led to a push for bilateral trading arrangements with India. However, India initially resisted such efforts, waiting for the completion of the Brexit process.
• India sought to understand the extent of preferential access the UK would have in the vast European market once it exited the EU's single-market dynamics. The UK's status as a permanent member of the UN Security Council and its strategic partnership with India further strengthen the bonds between the two countries. 
• Closer trade relations may also garner UK support for India's global issues, including the standoff with China in the Ladakh sector and its claim for a permanent seat on the UNSC.

Trade Review

• India may consider a review of trading agreements, including tariff renegotiations and country-of-origin certification provisions. The UK's populist approach to democratic politics, prioritizing its own interests, may create potential frictions with both the EU and its domestic affairs.
• While some major agreements were concluded during Prime Minister Modi's visit to the UK in 2015, their implementation has likely not been thoroughly assessed. India has been engaged in ongoing trade agreement negotiations with the EU, where Britain was perceived as a major obstacle.
• Similar obstacles may arise in post-Brexit trade negotiations, particularly as both countries heavily rely on service-oriented exports. As a result, a discrete agreement between India and the UK may focus on specific sectors such as pharmaceuticals, financial technology, chemicals, defense production, petroleum, and food products.

Way Forward

• India, as one of the world's fastest-growing large economies, has seen significant trade volume enhancement through the Free Trade Agreement (FTA) with the UK. However, policymakers express concerns that the FTAs signed by India with the UK have not yielded the expected tangible benefits.
• In fact, they argue that the liberal rules of origin have negatively impacted India's manufacturing sector. As a result, there is a pressing need for a comprehensive evaluation of the FTAs, considering goods, services, and investment flows, involving all relevant stakeholders.

Conclusion

• The potential for strong ties between India and the UK is immense, positioning them to develop one of the most important and positive relationships of the 21st century.