Those on the Right should be taking credit for the India trade deal, not sniping at it

Telegraph

06-05-2025

Let's start with the big picture – big being the apt word, for India is the fourth-largest economy in the world, and about to overtake Germany to be third.
So far, India's free trade agreements have been shallow and sparse. For the first six decades of its independence, India retained a Gandhian distrust of commerce. The wheel on its flag derives from a stylised handloom, like the one that Gandhi used to carry around as a symbol of economic self-reliance.
This is only the 16 th trade deal that India has signed, and it is vastly more ambitious than the previous 15.
Britain has pulled off something that no other country has, at least not on anything like the same scale. It has secured a comprehensive trade agreement with a teeming sub-continent that contains the world's largest and fastest-growing consumer class.
We live in a polarised age, and people who dislike Labour are looking for reasons to oppose what it has agreed. They have found three pegs on which to hang their doubts: migration, taxation and uneven tariff reduction. All three are nonsense. But, before we come to that, let us consider some of the other gains.
India is a common-law and (for business purposes) English-speaking country. There are more than two million Brits of Indian origin. All these things make for a natural economic partnership and, sure, enough, there has been a great deal of investment.
Indians enjoy buying famous British brands, such as Tetley and Jaguar. And British companies that invest the other way are thought of as Indian. Many Indians are astonished when they learn that JCB is in fact based in the UK. In their country, its initials have become a deonym, like Hoover or Kleenex – every Indian digger is 'a JCB'.
Trade, though, has not followed on the same scale, partly because India only recently started to open its markets, and partly because Britain only recently left the EU. Our share of India's trade has been falling, not least because we have been ceding ground to the countries that did strike trade deals with Delhi – above all Japan whose FTA, until yesterday, was the most ambitious.
Well, not any more. Apart from reducing or eliminating tariffs on almost all our traded goods, the deal opens India's gargantuan services market. There are chapters covering accounting, auditing, environmental services and some financial services. British know-how in services will boost India's growth, just as Indian imports boost ours. India's sheer size makes this a bigger deal for us than the Australia, New Zealand and Japan FTAs combined.
Let's deal with the objections, which are largely based on misunderstandings. First, migration. There is nothing in the deal about migration. Nothing. And nor should there be: it is a trade deal. All the stories about Indian students being allowed to stay here for longer, or easier family reunification, or more visas, are sheer nonsense.
The only issue that involves the movement of workers is an extension in the number of sectors for which a still limited number of business visas can be issued. But these are short-term work permits, carrying no right of settlement. Those Indian nationals who overstay their visas do not come here on business permits. They come as students or tourists and disappear when their visas expire.
The supposed national insurance exemption is in fact a double taxation treaty of the kind that we have with dozens of countries, designed to ensure that workers who cannot claim benefits in Britain (because they are not here long enough) don't pay social security contributions in two places. All foreign employees get 12 months off, and we have numerous treaties that extend that time reciprocally to two, three or four years.
Cutting tariffs might bring some incidental benefits to foreign exporters, but the chief benefit is to the country doing the cutting. Because its products become cheaper, its people have more spending money, and use that money to drive economic growth across the board.
This point is uncontroversial among economists; but it is counterintuitive, and therefore always unpopular with voters. Still, if we are reducing our tariffs on Indian textiles faster than they are reducing theirs on Scotch whisky, we are the bigger winners. (In any case, imported Indian textiles are mainly competing with imported Chinese textiles, not with domestic industries.)
This, in short, is a win-win treaty that will make both nations wealthier. It will also mean that each country is invested in the other's prosperity – no small consideration when the orientation of India matters so much in world affairs.
It was for precisely these reasons that talks were initiated under Boris Johnson. Instead of carping, Conservatives should be patting themselves on the back for having launched the initiative, and being big enough to congratulate Labour for finishing the job.