The UK and India have announced £1 billion of private-sector investment and committed to seek a free trade agreement (FTA) ahead of a virtual meeting between Prime Minister Boris Johnson and Indian leader Narendra Modi today (4 May).

In a government announcement this morning, the PM said: “In the decade ahead, with the help of the new partnership signed today and a comprehensive free trade agreement, we will double the value of our trading partnership with India and take the relationship between our two countries to new highs.”

Trade boost

Reuters reports that today’s £1bn package includes:

• £533m of new Indian investment into the UK, in growing sectors such as health and technology
• British exports to India worth more than £446m – including CMR Surgical exporting its Versius surgical robotic system
• £240m investment by the Serum Institute of India – supporting clinical trials, research and possibly the manufacture of vaccines

Around £200m of these deals will support low carbon growth.

According to the BBC, the package announced today will also create about 6,000 new jobs across the UK.

Ambitious target

Trade between the UK and India is already worth around £23 billion a year, supporting more than half-a-million jobs.

The UK government has stated an ambition is to double trade between the two countries by 2030.

Cancellation

Johnson had cancelled a planned trade-boosting trip to India earlier this month because of the surge in Covid-19 cases in the country – the second cancellation after January’s trip was also delayed due to the pandemic.

However, it is hoped that an already agreed-to Enhanced Trade Partnership (ETP) between the countries will lead to a full free trade deal.

The finalised ETP will lift export barriers on goods ranging from British apples to medical devices and takes steps to open India’s legal services sector to UK firms.

Flexibility

In an article for the Institute of Economic Affairs, trade expert Shanker Singham said the UK may have the right combination of offensive and defensive flexibility to be able to secure a comprehensive FTA with India.

The government will look for access to India’s financial services and legal services sectors, as well as a tariff reduction for goods like Scotch whisky, he said.

India, on the other hand, will call for freedom of movement for people supplying services and a commitment not to ban Indian agriculture products.

Singham added that Boris Johnson will have to stress that “while the UK welcomes a deeper relationship with India, this will depend on whether India endorses, in both word and deed, property rights protection, market competition and open trade”.