Spotlight- India-United Kingdom defense ties | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

In January 2024, India's Defence Minister Rajnath Singh concluded a three-day visit to the United Kingdom, marking the first defence ministerial visit in 22 years. This visit signifies a 'reset' of bilateral defence ties, despite acknowledging differing stances on the Russia–Ukraine war. It demonstrated a mutual commitment to prioritize bilateral defence cooperation and enhance prospects for delivering military capabilities to India. However, various challenges persist.

India's Trade Relations with the UK

• India articulated its aim to integrate the defence industries of both nations, including through supply chain integration to bolster resilience.
• The Defence Minister emphasized the importance of initiating interactions at the start-up level and identifying joint projects for implementation between India and the UK.
• India shares a rich historical relationship with the UK and currently views it as one of its foremost trading partners.
• The UK is a significant foreign direct investment (FDI) investor in India, and reciprocally, India is one of the largest investors in the UK among G20 countries.
• India and the UK have engagements across sectors such as pharmaceuticals, textiles, leather, industrial machinery, furniture, and toys.
• India also seeks support from the UK in technology-based sectors like high-quality cameras, medical devices, and automobiles.

Close Relations

• During discussions, both ministers welcomed investment and technology collaborations, highlighting India's skilled workforce, pro-FDI environment, and expansive domestic market.
• The Defence Minister emphasized the symbiotic relationship between the two countries, envisioning a strategic partnership for cooperation and innovation. This sentiment was echoed by Grant Shapps, emphasizing a strategic partnership beyond a mere buyer-seller relationship.
• India-UK ties extend deeply, with a substantial population of Indian origin in Britain, including members of Parliament and high-ranking officials in finance and home ministries.
• Before the COVID-19 pandemic, significant tourism existed between the two countries, with around half a million Indian tourists visiting Britain annually and twice that number in the reverse direction.
• Despite limited opportunities for post-graduation employment, approximately 35,000 Indians study in Britain.
• Britain is a leading investor in India, while India is the second-largest investor and a significant job creator in Britain.
• This partnership is envisioned to deepen military ties, cooperation in Indo-Pacific strategies, counter-terrorism efforts, and combating climate change.
• Highlighting the cooperation during the pandemic, a significant aspect of India's relations with the UK will be closer collaboration on vaccine manufacturing.

Significance

• Brexit: Since the UK voted to leave the European Union (EU) in June 2016 and officially exited in January 2020, it has been urging India to establish a bilateral trading arrangement. However, India had been hesitant, preferring to await the completion of the Brexit process first. India has been particularly interested in understanding the extent of "special and preferential" access the UK will have in the expansive European market post-EU membership.
• Strategic Partnership: As a permanent member of the UN Security Council, the UK holds strategic significance for India. Strengthening trade ties could potentially garner UK support for global issues such as the standoff with China in the Ladakh sector of the Line of Actual Control (LAC) and India's aspiration for a permanent seat on the UNSC.
• Trade Review: India may consider a review of existing trading agreements, including renegotiating tariffs on certain items and tightening provisions regarding country-of-origin certification. The UK's political landscape, characterized by populism and a focus on national interests, could pose challenges, both within the EU and domestically.
• Modi's Visit: Prime Minister Modi's visit to the UK in 2015 resulted in the signing of six major agreements. However, the implementation of these accords may not have been thoroughly assessed. Given the pace of contemporary diplomacy, new treaties often overlap with existing ones, even without significant progress.
• FTA Negotiations: India has been engaged in protracted negotiations with the EU since 2007, with Britain often identified as a key obstacle. Areas of contention include duty reductions on automobiles, wines, and spirits, as well as demands for India to liberalize its financial sectors. Post-Brexit, similar challenges are expected, particularly as both countries have economies heavily reliant on services.

Way Forward

India, as one of the world's fastest-growing large economies, views FTAs as instrumental in boosting trade volumes. However, policymakers contend that previous FTAs with the UK have not yielded anticipated benefits and have adversely affected India's manufacturing sector due to liberal rules of origin. Hence, there is a pressing need for a comprehensive assessment of FTAs, encompassing goods, services, and investment flows, involving all relevant stakeholders.

Conclusion

There is significant potential for the India-UK relationship to emerge as one of the most consequential and positive partnerships of the 21st century.