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UK-India Free Trade Deal

Volume 824: debated on Wednesday 26 October 2022

Commons Urgent Question

I ask noble Lords to indulge me with their forgiveness for not delivering my maiden speech as my first item, but I have been asked to answer this Question. I will be giving my maiden speech tomorrow, for those who wish to hear it, in a QSD on Iran. It is a pity, because I should obviously like to use this opportunity to talk about the courtesies and kindnesses I have received from so many noble Lords, but please know that that will be forthcoming tomorrow.

I also declare an interest, as we are talking about India and a free-trade agreement. I have equity in a fund management business that invests in India, although I do not think there are any specific issues raised by this discussion.

With the leave of the House, I shall now repeat the Answer given to an Urgent Question by my right honourable friend the Minister for Trade Policy.

“India is an economic superpower, projected to be the world’s third largest economy by 2050. Improving access to this dynamic market will provide huge opportunities for UK business, building on a trading relationship worth more than £24 billion in 2021. That is why we are negotiating an ambitious free trade agreement that works for both countries. We have already closed the majority of chapters and look forward to the next round of talks shortly.

A strong FTA can strengthen the economic links between the UK and India, boosting the UK economy by more than £3 billion by 2035. An FTA can cut red tape, making it cheaper for UK companies to sell into India’s dynamic market, helping drive growth and support jobs across region of the UK. Greater access could help UK businesses reach more than a billion more consumers, including India’s growing middle class, estimated to reach a quarter of a billion by 2050, and give them a competitive edge over other countries that do not have a deal with India. An FTA with India supports the Government’s growth strategy by taking advantage of the UK’s status as an independent trading nation, championing free trade that benefits the whole of the UK. We remain clear that we are working towards the best deal for both sides and will not sign until we have a deal that is fair, reciprocal and, ultimately, in the best interests of the British people and the UK economy.”

My Lord, I welcome the Minister to your Lordships’ House and wish him all the best for his maiden speech tomorrow. I know he will agree that achieving a free trade agreement with India is vital for the opportunities it presents— financial opportunities to increase our GDP, create new markets and achieve key areas of shared interest, but also opportunities to raise a number of vital issues where the Indian Government fall short, including on human rights and workers’ rights, the environment, climate and other geopolitical issues.

In January, the Government promised that talks towards the deal would be completed by Diwali, which Hindus across the world are celebrating this week. What makes the Government’s failings on this FTA all the worse and significant is that that deadline was self-imposed, but we all knew it would fail. I challenge the Minister: can he therefore outline to your Lordships’ House what plans his Government are making to get the talks back on track?

I thank the noble Lord, Lord McNicol, for that follow-up question, and thank him very much for his kindness earlier, as well. He promised to be as kind as possible during this debate, so I thank him for that.

Actually, the Government never promised to conclude these talks by Diwali. We promised to have the majority of the talks concluded by the end of October, which we have: 16 chapters, the majority, are already concluded. This trade deal is actually on track. For me, it is one of the most exciting opportunities this country has had in generations. If we think about what India has to offer us, it is phenomenal. I was in India last week, and I pay tribute to our staff on the ground there, who are doing a huge amount of work to ensure our cordial relations with a country that will, in my view, become one of our greatest partners. I have celebrated Diwali with our high commission office in Mumbai.

Negotiations are ongoing and have been going on today. We have had five formal negotiations so far, I think; we are expecting a sixth in the next month or so. If we expect progression of that, we will be looking forward to substantial progress over the coming months.

My Lords, I also welcome the noble Lord to his position. Since I have been covering international trade issues for these Benches, he is now the seventh Minister that I have been shadowing, so I wish him a long time in the position. If he lasts more than nine months, he is breaking the average over the last few years.

Given that the Minister has not yet had an opportunity to update his register of interests on the Parliament website—I am grateful for his declaring of that interest at the moment—could he say, given that the UK is seeking to have services as part of this agreement and given that he has a direct financial interest, whether he will recuse himself from any of the discussions on services going forward?

We would support an FTA with India very strongly, and when we debated the issue, we also questioned which areas were still outstanding. Can the Minister confirm that the UK has put wider visa access and mutual recognition of qualifications on the table?

Can he also confirm that—while not disregarding the figures of benefits that he indicated—nearly as much of the benefit for trade with India will be offset by a decline in trade with developing nations through trade diversion, to the tune of about £3 billion, which means that the net benefit for trading with the wider region is far less than what we would expect?

Finally, can he say whether the fact that India has negotiated with Moscow a rupee/rouble swap, for the purchasing of cheaper fuel, has been raised by the UK at the very time that we are discussing services access? Surely it is not right for us to fail to raise issues of such seriousness when we are negotiating with our friendly nation in Delhi.

I thank the noble Lord, Lord Purvis, for that range of questions, which I am sure we will have an opportunity to discuss at great length personally. I would like to reassure noble Lords that I am very much available to all of them for not only the formal process for discussion around trade deals but also as an individual, to make sure that we share the excitement and the opportunities offered to us and I can give noble Lords as much information as I can, in order that we can progress this process.

I would like to answer, most importantly, the first question. I do not want to go into my financial details now, but I am in the process of ensuring that I will not be presented with a conflict of interest in the next few days—hopefully by the end of the month. Of course, if there is any conflict of interest, I assume that will be addressed in the appropriate manner. I am grateful to noble Lords for your indulgence to ensure that this is done properly and effectively, and I hope that you see me as transparent on this point.

My Lords, I also welcome my noble friend the Minister to the Dispatch Box. If the House will indulge me for a second, I have known the Minister since we were teenagers, and he has always been wise, humble and funny, albeit evincing a curious fondness for the European Union which doubtless will endear him to all sides in this House, including several noble Lords who I see are present here now.

May I ask him about the potential landing zone for the UK-India FTA? There has been a demand from some in Delhi for visa rights equivalent to those for Australia and New Zealand, which I think all sides recognise is not realistic given the disparity in GDP and the disparity in numbers. However, I think that there is space for a more generous visa regime, particularly for business travellers and some work permits, as well as a more generous attitude from the UK when it comes to respecting WTO rules on food, rather than adding on EU additions, in exchange for a lot more market access for our services. Does my noble friend the Minister see the outlines of a deal on that basis?

I am very grateful to my noble friend for highlighting our childhood friendship and exposing me as a Europhile—I am not sure if that was quite so necessary in my opening gambit. But I am a free trader above all things, and I think he encapsulates very well the views of this Government in terms of the benefits that free trade brings.

I would like to make an important clarification, and I am happy to have further discussions with noble Lords about this. The free trade agreement with India does not include sections on immigration; that is a completely separate matter. What we are talking about here is mobility visas for businesspeople, and we require those opportunities as much as Indian companies do. I remind noble Lords, and my noble friends behind me, that Indian companies in this country employ literally tens and tens of thousands of people. The opportunities we have to swap intellectual property—our human capital, which is what we will export to India in exchange for the huge opportunities that it will present to us—insist on, and ensure we should have, an element of toing and froing. That is how we benefit through the brotherhood of trade and the brotherhood of nations. But I must separate those two points; I think that is very important.

On behalf of the International Agreements Committee and as its chair, I welcome the Minister to his place. He will have read our report on the India free trade agreement, so I will ask him two questions. The first is the one that he did not answer from the noble Lord, Lord Purvis, on how this sits alongside the close relationship that India has with Russia, which goes against our current interests. Secondly, facilitation payments are common in India and are well below modern international business standards. What are the Government doing to tackle this great problem in our business relations with India?

I greatly appreciate the noble Baroness’s question. I thank her for all support she has given us in the department to ensure that we have a very powerful exchange and that we work very closely with her and her committee. I hope she will feel that I am fully available to her to ensure that she is thoroughly apprised of our activities around all free trade deals.

It is important that we are negotiating a free trade deal with India, and it is important to note, when it comes to the noble Baroness’s question about Russia, that we work with all our international partners, including India, to co-ordinate the international response to Russia’s unlawful invasion of Ukraine. We encourage all our partners to support international efforts to counter Russia’s flagrant aggression and violation of the United Nations charter, and to avoid any actions that might undermine this. It is important that we stress our position in those words.

My Lords, I too pay due regard to and thank all our representatives in India, including those in Bangalore, Hyderabad and Mumbai. I have recently returned from that country, and I left with an undeniable assessment that there is a firm need for this country to have a strategic relationship with India. We need to run to keep up. One area I can identify in particular is the supply chain, given our issues with China. There is a real role for India to fulfil that position not only for the UK but globally, along with Turkey and Brazil, for example, so that supply chain issues can be diversified to the benefit of the world at large.

I thank the noble Viscount, Lord Waverley, for his point and I completely agree: the opportunities we see there are phenomenal. If we can find a powerful way to access this market, we will astonish ourselves with the wealth that we will create and the additional opportunities that we will have to control our destiny. When I was there last week, I came across a mobile phone company that had 400 million subscribers and a car company that wanted to sell 30,000 cars in one year and instead sold 100,000 in half an hour. As has rightly been said, there are opportunities for this nation. It is a millimetre away from escape velocity to become one of the greatest economies in the world. The state of Tamil Nadu will have an economy bigger than the UK’s, we think, in 10 to 15 years’ time. I appreciate the noble Viscount’s support and this question. We should be continually striving to do free trade agreements with India and other countries. I very much look forward to the support of noble Lords opposite and my noble friends behind me as we embark on this great mission.