Editorial: New hopes on trade deal

The much-delayed Free Trade Agreement (FTA) between India and the UK is expected to gain momentum with a stable Labour government in place.

The landslide victory for the Keir Starmer-led Labour Party in Britain’s Parliamentary elections, ending the 14-year rule of the Conservative Party, has significant implications for the Indo-UK bilateral relations. The much-delayed Free Trade Agreement (FTA) between the two countries is expected to gain momentum with a stable Labour government in place. In its manifesto, the Labour Party had pledged to seek “a new strategic partnership” with India, including the FTA, which has been in the making for over two years now and to deepen cooperation in security, education, technology, and climate change. The previous Tories’ regime was plagued by political instability and frequent change of leadership, adversely impacting the bilateral trade deal. With the change of guard, New Delhi is now hopeful that the pact would be finalised and sealed this year without major hitches. The Labour Party sees substantial benefits in the India-UK FTA, which provides access to the growing Indian market and bypasses high tariff barriers. This agreement could boost UK exports by offering a significant price advantage. The prospect of a Labour Party government may have initially caused anxiety in some quarters in India, given the past experience with Labour leadership, but it must be pointed out that unlike his predecessor Jeremy Corbyn, a Left-leaning hardliner, Starmer is widely seen as a more pragmatic politician who is favourably disposed towards India. Of particular concern was Corbyn’s public stand on the Kashmir issue. In September 2019, the Labour Party, with Corbyn at the helm, passed an emergency motion calling for international observers to “enter” Kashmir and demand the right of self-determination for its people.

The resolution also called upon Corbyn to meet the high commissioners of both India and Pakistan to ensure there is “mediation” and restoration of peace and normality to prevent a potential nuclear conflict. Expectedly, India condemned the move as an effort to “pander to vote-bank’s interest”. However, Starmer amended his party’s policy, corrected its mistakes and included in his recent poll manifesto a commitment to pursue a new strategic partnership with India. During meetings with the Indian diaspora and public addresses, he affirmed that Kashmir was an internal issue and would be resolved by India and Pakistan. The new Labour boss has, on numerous occasions, declared that his party would seek a closer relationship with India and the 1.8-million-strong British Indian community, which contributes over 6% to the British economy. The present Labour leadership is more focused on economic issues and appreciates the need to harness the full trade potential with India. At present, among the sticking points in the trade deal are the UK’s insistence on lowering tariffs on some items, and its immigration policies, particularly concerning Indian service sector workers. India has also raised concerns over the UK’s proposed carbon tax which could potentially undermine the tariff concessions agreed upon in the FTA.

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