Theresa May lays groundwork for post-Brexit India trade deal

Britain's Prime Minister Theresa May walks towards her car after her arrival at the airport in New Delhi.
Britain's Prime Minister Theresa May walks towards her car after her arrival at the airport in New Delhi.PHOTO: REUTERS

NEW DELHI (AFP) - British Prime Minister Theresa May will seek to lay the groundwork on Monday (Nov 7) for a potential post-Brexit free trade deal with the world's fastest-growing major economy on a landmark visit to India.

In her first bilateral trip outside the European Union since taking office in July, Britain's premier will meet her counterpart Narendra Modi and address industrialists at the start of a two-day visit.

Accompanied by a delegation of around three dozen business leaders, Mrs May arrived in the smog-bound capital New Delhi late Sunday and will travel to the southern tech hub of Bangalore on Tuesday.

Although Britain cannot sign any bilateral trade deals until it has left the European Union - most likely in 2019 - May's visit is seen as signalling a desire to get the ball rolling as early as possible.

Mr Liam Fox, in charge of a new department for international trade, is travelling with her and due to hold detailed talks with his Indian opposite number Nirmala Sitharaman on Monday.

Speaking before her departure from London, May said the two countries were "natural partners" and she was committed to "rebooting an age-old relationship in this age of opportunity".

"Together I believe we can achieve great things - delivering jobs and skills, developing new technologies and improving our cities, tackling terrorism and climate change," she said.

A British official said Mrs May had made India a priority as "it matters now more than ever", given that its current 7 per cent growth is better than all other major economies and its population should overtake China's within a decade.

"On trade, we really want to unlock the potential of the relationship on both sides," the official told reporters. "That means looking at how we can lay the groundwork before we leave the EU for breaking down existing barriers to trade that there are." While the benefits of a deal to Britain are evident, sealing one will be no easy task in a country which has been negotiating with the EU as a whole on a free trade agreement for the best part of a decade.

India still has a rigorous regime of tariffs and red tape which have traditionally made it one of the most complex places to do business, even if the potential market is huge.

Britain's need to cut deals quickly once it leaves the EU gives Mr Modi's government an added incentive to strike a hard bargain.

There is particular unhappiness in Delhi over visa restrictions on students wanting to stay on in Britain after completing university courses which have led to a 50 per cent drop in Indians enrolling.

In an editorial, The Hindustan Times said the former colonial power was now "strategically irrelevant", urging India to "put the focus on immigration" in any deal - something which could be hard for Mrs May to sell back home.

Anger at levels of immigration from both inside and outside Europe were seen as a crucial factor in the outcome of the June referendum when British voters opted to pull out of the EU.

A senior Indian official acknowledged the issue was likely to figure in the talks.

"We expect mobility issues to be raised during the visit," Foreign Ministry spokesman Vikas Swarup told reporters.

The governments are are also expected to sign an agreement during the visit on intellectual property and launch a partnership to help India develop "smart cities", which are designed to be models of urban planning - one of Mr Modi's pet projects.

Despite their historical ties from the colonial era, bilateral trade is relatively low at US$14 billion (S$19.4 billion) last year - smaller than the volume of trade between India and Germany.