When Theresa May left India last week, completing her first international trip outside of Europe, she boasted that her visit had sealed £1 billion of deals, which would create over 1,300 jobs. “Leaving the European Union”, she declared, “presents us with a world of opportunities.”
Even by the ritual hyperbole of these after-action reports, this was tenuous. When Indian prime minister Narendra Modi had visited David Cameron last November, the visit yielded a claimed £9 billion in deals, with 1,900 jobs.
A week on, a lingering sense of disappointment hangs over May’s trip, like the smog blanketing New Delhi. The visit was “underwhelming”, declared the Hindustan Times and The Hindu in their headlines. She returned “empty-handed”, said India’s Financial Express. The Indian Express headlined its leader: “Cool down, Britannia”.
Britain may be free to begin exploring trade deals for its post-EU future. But what is clear is that the uncertainty around our terms of access to the single market and the toxic salience of immigration are weighing down our diplomacy.
The UK-India relationship is on a relatively strong, if uneven, footing. Britain is the largest G20 investor in India, while Indian investment the other way, which grew 65 per cent last year, is behind only the US and France.
Indian companies employ almost 110,000 employees in the UK, and well over half of the 1,200 Indian companies in the EU are here.
On the other hand, the trading relationship is less heartening. UK-India trade has fallen by over £1.8 billion over the past three years, while the UK share of India’s overall trade has consistently declined over the previous decade.
In the table of exporters to India, the UK sits ignominiously below Switzerland, Venezuela, Belgium, and South Africa. And India makes up under a tenth of our services exports to Asia, despite the advantages of law and language.
What role can Brexit play in this?
India and the EU started negotiating a trade deal in 2007, but it lies stagnant after 13 rounds of frustrating negotiations over tariffs, visas, intellectual property, and investment disputes. India is relatively sceptical about engaging with the EU, preferring to emphasise bilateral ties with the big European powers.
The hope is, therefore, that post-Brexit Britain can nimbly sidestep this tortuous EU-India process, involving over two dozen potential veto players, and cut its own deal directly with New Delhi.
The problem, though, is twofold.
First is the continued uncertainty around the terms of British access to the single market. Technology and telecoms, pharmaceuticals and chemicals, and financial services together make up over three-fifths of Indian capital in Britain, while the most rapidly growing sectors in terms of Indian merchandise exports to the UK are cars, medical goods, engines, and aircraft.
All of these sectors would be deeply affected by a so-called hard Brexit, which would complicate EU-wide supply chains and the regulatory environment.
This month’s court ruling on Article 50 and the election of a US president profoundly hostile to trade deals may have lessened the risk of a drastic British breach with the EU, and a depressed pound will offset some of these risks.
But the Article 50 process will absorb Britain’s embryonic team of trade negotiators for the next two years at least, slowing efforts to prepare the ground for a deal with India.
The second issue is visas, which dominated the headlines during the Prime Minister’s trip.
Mrs May, as home secretary, presided over a collapse in Indian student numbers – largely attributable to her changes in the rules for post-study employment.
Three years ago, she also introduced a £3,000 cash bond for Indian visitors, provoking outrage in New Delhi before the scheme was scrapped. More recently, May’s Government has mounted further attacks on international student numbers.
The Prime Minister, therefore, bears a great deal of responsibility for a serious and adverse shift in Indian opinion. No less a figure than India’s own commerce minister lamented last week that “we are not being treated as old friends any longer”.
At the same time, this is not an entirely fair judgement. Nine out of 10 Indian visa applications to Britain are still successful. Indian companies still get three-quarters of all their intra-company transfer visas approved, and Indian nationals got by far the largest share of Britain’s skilled work visas in 2015-16.
If recent rule changes have had a disproportionate impact on India, it’s partly because of the depth of these ties.
These facts tend to get lost in the Indian posturing, which must be understood as part of the country’s broader push to secure favourable access for its professionals abroad.
The important point is that this issue bedevilled the EU-India FTA negotiations and we should expect that New Delhi – which realises our desperation to strike a deal – will drive a hard bargain on the issue.
But there is a larger problem here, and it lies in the way the UK thinks about its place in Asia.
Britain remains Europe’s largest military power, a bigger military spender than any great power in Asia except China, and a permanent member of the UN Security Council.
Yet May introduced her trip as a “tight professional engagement”, focused on “demanding our due place in the trade deal”.
This is a needless and damaging narrowing of horizons. We may be a nation of shopkeepers. But we, like India, also have deep interests in maintaining what we both see as a liberal economic order and a stable, predictable security order.
The financial crisis, the global populist wave, and the rising ride of economic nationalism are placing the first under threat. The rise of China, Russian assertiveness in Europe and the Middle East, and perceptions of receding American power are eroding the second. The election of Donald Trump is a major shock to both.
India may not see eye-to-eye with us on all these issues. They are pro-Putin, for instance, and see Western intervention in the Middle East as a far more destabilising force than Russian aggression.
But New Delhi’s rise is predicated on continued economic flows and a secure Asia. The lengthy UK-India joint statement after Mrs May’s visit recognised many of these commonalities, but the message was obscured by a relentless commercial focus aimed more at the British papers than our Indian partners.
This unsentimental approach is welcome, insofar as it strips away the delusions of those who suppose that a soft-power legacy of Commonwealth, cricket, and curry will make any serious impact on an aspiring great power.
But it also underplays the security challenges that dominate Asia’s politics. In doing so, it shows the limits to a strategy that sees us rolling out the red carpet for Xi Jinping one week, and courting Japan and India the next.