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Time of India
16-05-2025
- Business
- Time of India
UK-India FTA : Labour's Trump card in a world of diplomatic quicksand
The UK-India Free Trade Agreement, signed on May 6, 2025, represents more than just an economic transaction—it's a geopolitical masterstroke unlocking £25.5 billion in bilateral trade by 2040. For Labour, this deal serves as a strategic move, anchoring Britain to India's £4.19 trillion democratic powerhouse amid multiple global challenges. Post-Brexit Britain, having suffered a 15% drop in EU trade, desperately needed new markets. India emerged as the obvious choice over China's £14.9 trillion economy, which comes with significant diplomatic complications. The FTA slashes India's prohibitive tariffs on UK whisky (150%) and automobiles (59-125%), creating access to a £1 billion whisky market and boosting services—which represent 80% of the UK's GDP and 42% of India's economy. The Double Contribution Convention further drives foreign direct investment, building on the UK's outward foreign direct investment stock in India of £17.4 billion and India's inward FDI stock in the UK of £13.1 billion as of 2023, the agreement is projected to increase UK GDP by £4.8 billion each year in the long term. This agreement provides crucial protection against American protectionism, where Trump's tariffs threaten British exports. Labour's success stands in stark contrast to the Conservatives, who stalled talks since 2022 over visa negotiations and tariff reductions. Within just ten months, Starmer's government delivered results through strategic concessions on IT and healthcare worker mobility and targeted tariff cuts. The timing is significant—not occurring in a vacuum but amid a year of diplomatic turmoil and political reckoning for Britain. As the UK navigates fractured relationships with Israel, China, and Bangladesh while facing internal scrutiny over domestic scandals, the completion of the India deal signals a newfound strategic maturity in British foreign policy. Navigating diplomatic minefields The FTA triumph represents diplomatic finesse, pivoting from Jeremy Corbyn's alienating blunders to Keir Starmer's strategic acumen. Corbyn's 2019 Kashmir resolution and apparent Khalistani sympathies had damaged relations with both the Indian government and the 1.9 million British Indian diaspora, costing Labour crucial votes in areas like Leicester and Birmingham. For Starmer, elected in July 2024, the FTA offered an opportunity to restore India's trust while recapturing diaspora support, strengthening Labour's electoral foundation. British diplomacy has weathered significant challenges recently. Relations with China deteriorated following the Yang Tengbo espionage scandal and the detention of Liberal Democrat MP Wera Hobhouse in Hong Kong this April. Equally troubling was the rupture with Israel after Israeli forces detained Labour MPs Abtisam Mohamed and Yuan Yang while they sought to visit Gaza for a humanitarian mission — a diplomatic embarrassment that exposed the consequences of unsanctioned regional engagement. This incident stood in stark contrast to Labour's earlier stance in 2023, when the party controversially refused to support a parliamentary ceasefire bill, a decision that fractured internal unity and alienated segments of its electoral base in key constituencies. Taken together, these episodes reveal how Labour's international positioning has repeatedly cornered it into diplomatically fraught situations while fracturing domestic unity, forcing the party to seek alliances it could maintain without incurring political cost. In contrast, Labour crucially avoided Canada's fate, where Khalistani tensions — intensified by Ottawa's 2023 accusations against India over a Sikh activist's killing — collapsing the diplomatic ties of the two countries. The case of Jagtar Singh Johal, a British Sikh detained in India since 2017, posed a similar test of resolve. Conservative governments faltered under advocacy pressure, Starmer's leadership favoured quiet diplomacy, containing the issue while safeguarding £38 billion in prospective trade deals. This approach reflected a calculated restraint: avoiding inflammatory rhetoric, downplaying nationalist provocations, and prioritising economic engagement. The contrast with Canada's mishandling of the Hardeep Singh Nijjar affair is striking — where Ottawa's misstep led to a diplomatic freeze, Britain navigated parallel tensions with notable composure. Yet whether this careful balancing act can shield Labour from future diplomatic entanglements without alienating core constituencies remains to be seen. India as the natural ally in a volatile landscape South Asia's volatile landscape left Britain with few credible partners — and made India not just a preferred choice, but the indispensable one. Pakistan's economy struggling at $373.08 billion in nominal terms for 2024, and further isolated after the 2025 Pahalgam attack, posed an untenable diplomatic and commercial risk. Bangladesh, meanwhile, descended into democratic instability following Sheikh Hasina's ousting in 2024, with a 10% export decline and a corruption scandal so politically radioactive it cost Labour MP Tulip Siddiq her ministerial post in January 2025. In such a fractured regional order, India alone offered scale, stability, and strategic heft. At home, Labour faced parallel crises. Elon Musk's incendiary posts on X about grooming gang scandals reignited racialised debates around British-Pakistani networks and child exploitation, directly targeting Starmer and minister Jess Phillips. Combined with backlash over Labour's Gaza stance and eroding Muslim community support, the party's position on Pakistan — historically tied to diaspora sensitivities — grew increasingly untenable. In this atmosphere, the India deal became both an economic imperative and a political recalibration. Crucially, Labour held firm. The free trade agreement was neither derailed by anti-Modi critics nor diaspora demands over Kashmir. That resilience reflected a hardheaded realism: recognising India not through the lens of Western ideological purism, but as it stands — a rising power, a Quad member, and a necessary economic ally in an unstable world. Economically, India's value was unambiguous. The FTA's focus on SMEs — responsible for 60% of UK jobs and 30% of India's GDP — alongside service sector alignments, promised resilience through regulatory compliance with India's 2023 Personal Data Protection Act and Britain's 2027 Carbon Border Adjustment Mechanism. But beyond market access, the deal marked a deeper strategic pivot: Britain choosing pragmatic engagement over performative diplomacy, reclaiming diaspora confidence not through rhetoric, but by securing tangible, future-facing partnerships. In a year marred by diplomatic setbacks and domestic political storms, India emerged as the indispensable partner Britain could neither afford to alienate nor replace — a sober reminder that in foreign policy, necessity often trumps sentiment. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
Yahoo
07-05-2025
- Politics
- Yahoo
Labour MPs signal rebellion over welfare cuts
A number of Labour MPs have said they will vote against the government's proposed cuts to disability benefits. Nine Labour MPs voiced concern over the government's plans to make it harder for people with less severe conditions to claim disability payments during a debate on Wednesday. Calls to rethink the benefits cuts, as well as other policies, have been growing after Labour lost 187 council seats during the local election last week. Disability minister Sir Stephen Timms told the MPs the goal of the reforms was to make sure the welfare system was "financially sustainable in the long term". In March, the government announced a major welfare shake-up aimed at saving money and supporting people who can work to find jobs. Ministers said changes to a key disability benefit called personal independence payment (Pip) and universal credit (UC) would save around £5bn a year by the end of 2030 and get more people into work. Overall, the government spends £65bn a year on health and disability-related benefits. Before the government announced the Pip and UC changes, this was projected to increase to £100bn by 2029. The government estimated that 3.2 million families could be worse off as a result of the reforms, while 3.8 million families will be better off by 2030. The government is expected to pass a new law to make the welfare changes, giving MPs a chance to vote on the plans. Backbench discontent Speaking during the debate in Westminster Hall, Diane Abbott, the Labour MP for Hackney North and Stoke Newington, said the government was "making a conscious choice to balance its books on the backs of people on welfare". Ian Byrne, who represents Liverpool West Derby, said he would "swim through vomit to vote against" proposed welfare changes. Labour MPs Richard Burgon, Rachael Maskell, Andy McDonald, Cat Eccles, Nadia Whittome, Imran Hussain, Steve Witherden and Ian Lavery also said they would vote against the government's proposals. They were joined by John McDonnell, an independent MP for Hayes and Harlington who had the whip removed by Labour for rebelling against the government over the two-child benefit cap. A number of other Labour MPs have also indicated they are minded to oppose the benefits cuts in comments at events, in articles for local papers, as well as on social media. Disability minister Sir Stephen Timms defended the proposals, saying it was not sustainable for welfare spending to rise at the current rate. "The current system produces poor employment outcomes, high economic inactivity, low living standards, high costs to the taxpayer. It needs to change," he said. "We want a more proactive, pro-work system that supports people better and supports the economy as well." Prime Minister Sir Keir Starmer has come under increasing pressure to change course on some policy decisions. At Prime Minister Questions on Wednesday, Sir Keir defended the decision to axe winter fuel payments for millions of pensioners. It came after a group of about 45 Labour MPs representing seats in northern England and the Midlands joined those urging the government to rethink the move. The planned changes to disability benefits could become the next big political flashpoint, with legislation likely to be brought to the House of Commons in June. The BBC has been told some potential rebels are being assured they won't lose the party whip if they abstain – or make themselves scarce – when the vote comes. The government is not at risk of defeat, given Labour has a large majority, but a sizable rebellion could show the extent of the discontent within the party. Senior minister Pat McFadden said "we have to win the fight for Britain's future" while speaking at the Parliamentary Labour Party's first gathering since the local elections, party sources said. The Cabinet Office minister criticised Reform UK, including the new mayor of Greater Lincolnshire, Dame Andrea Jenkyns, who said her party would "reset Britain to its glorious past" in her victory speech. McFadden said: "Labour is always at its best when we look to the future. This is the fight of our lives, this is the generational fight in this new political era. "I want to tell you we have to take on this new fight for the future - and we have to win."
