A Prime Minister on a business trip to one of the world’s fastest growing economies warrants some airtime and media coverage, but if it comes in the aftermath of a bitter, closely-fought Brexit, the stakes become higher. Britain’s Prime Minister Theresa May travelled to India this week to lobby for free trade deals, as the country prepares to act alone in a post-Brexit world. India, under the leadership of Narendra Modi, is positioning itself as a business-friendly, growth-oriented market. Against the backdrop of recent developments, an Anglo-India business alliance seems like a win-win, however, it will need concerted efforts for any real progress to be made.
Britain and India have enjoyed cordial political and business relations for a long time. According to GOV.UK, Britain-India trade was valued at £18.94 Bn in 2014, with the UK exporting £6.35 Bn worth of goods to India. However, analysts are of the view that the real potential of Britain-India trade deal is yet to be achieved, and both Modi and May are aware of the long road ahead. “The challenge for British PM is to find opportunities while preparing for a formal exit from European Union, and India, with its growing economy and business-friendly government, is a natural ally. Although there are concerns about education visa policy of May government, the overall outlook toward Britain is overly positive”, said Sudip Saha, COO of Future Market Insights.
In a post-Brexit world, India doesn’t need Britain as badly as Britain needs India. In addition to Britain, India has the option of doing business with EU, however, Britain will have to rely on APAC and America for exploring favourable trade deals.
Big business names were conspicuous by their absence in Theresa May’s entourage, which indicates that multinational companies are not yet sure about their alliance in a post-Brexit world. While the British government was quick to reassure any anxieties by stating that the India trip was especially focused on small and medium businesses, the presence of known names would have definitely made a bigger impact.
It will take a number of years before Britain can formally sign a trade agreement with India, given it is still in the process of exiting EU. However, Theresa May’s recent visit should be seen in the context of the long-run. When the two countries get down to talk business, it will come down to two things – Britain’s demand for access to India’s financial service market and India’s demand for less stringent education and work visas. And, this is where May will have a lot of work to do. She has replaced an anti-Brexit PM and raising the cap on net immigration may not go down really well with pro-Brexit lobby. Getting a favourable deal with India without going back on current immigration policy will be challenging for May. As for India, opportunities abound as Britain’s wooing may influence EU to reconsider the impending free-trade deal.