Britain’s exit from the European Union on October 31 is expected to impel Boris Johnson’s government to make fresh efforts to finalise a trade agreement with India. The United Kingdom is among India’s main trading partners in the EU, accounting for 17 per cent of overall trade with the group. India-UK trade increased at an annual average of 8.8 per cent between 2002 and 2018. But the new British prime minister feels this isn’t enough. Mr Johnson commented that “India is a massive static market” which he would like to see opening up to more British brands.
The two big elephants in the room are retail trade and immigration. The first is in Britain’s interest but is opposed by India. The second is India’s principal demand but resisted by Britain. “In India Sainsbury’s can’t set up, they have no Waitrose in India (either)” Mr Johnson complained recently, referring to two upmarket grocery supermarkets. “Just imagine that!” It sounded like Americans who used to be surprised and dismayed to find themselves in a country that didn’t sell McDonald’s burgers or Coca Cola. Those had become the instantly recognisable ikons of American civilisation worldwide. Sainsbury and Waitrose don’t enjoy that popular status in Britain but another supermarket, Tesco, which has an agreement with the Tata Group, does come near it.
Tesco has had a limited presence in India with a service centre in Bangalore, and some outsourcing. In 2008, Tesco announced plans to invest an initial £60 million in a wholesale cash-and-carry business based in Mumbai. In 2014, the Tesco-Tata joint venture was confirmed, becoming the first foreign supermarket to enter the country. But the Tesco name is missing, the stores are being operated as Star Bazaar.
India allows individual brand shops but not multi-brand retail selling. Mr Johnson has promised his Indian constituents that he would forge a "truly special" bilateral relationship. He had told Narendra Modi that India and UK being modern democracies should work together to promote trade and prosperity. But if this means permitting foreign supermarkets, he is seeking a major policy change.
The quarrel has been brewing a long time. "It is fair to say not all British companies have found it entirely easy to operate in India,” Mark Field, who was in charge of Asia in the British foreign and Commonwealth office under Theresa May, told the House of Commons. New Delhi’s objection that the British are ungenerous and discriminatory in issuing visas may be true in a general sense but is possibly not very logical in this particular instance since extended stay usually leads to migration. India chaffs at work restrictions on students who have completed their post-graduate studies in the UK and wish to stay on to gain practical experience. They could do so for two years after graduation until Mrs May, then home secretary, began her crackdown on immigration in 2012 to meet the government’s target of keeping annual net migration to “the tens of thousands”. The time that students can work after graduating was cut to four months, although the government later recognised this was causing problems and agreed to raise the limit to six months.
While Mrs May refused to budge from this rigid position even after becoming prime minister, Sajid Javid, her home secretary, who is now chancellor of the exchequer, called for a more liberal policy on international students who want to stay on to work after graduating from UK universities. Himself, the son of a Pakistani immigrant who worked as a bus driver, Mr Javid argued that the former prime minister’s insistence that foreign students can work for no more than six months after completing their studies undermines British universities and harms the country’s search for the best global talent. “It makes no sense to send some of the brightest and most enterprising people in the world straight home after their time here,” he wrote in the Financial Times. His decision to back a cross-party move to liberalise the student visa regime, led by the former Tory universities minister, Jo Johnson (the present prime minister’s brother, and a former Financial Times correspondent in India) was seen as a sign that immigration rules would be eased once Mrs May left Downing Street.
Mr Javid’s comments received strong support from within the higher education sector, which has long called for eased visa requirements to encourage international students to find work or set up a business after graduating. Alistair Jarvis, chief executive of Universities UK, the umbrella body for 136 institutions, said such a change in policy would “correct a longstanding policy barrier to growth in international student numbers”. According to him, “growth in international enrolments in the UK has stagnated compared to our competitors, largely due to the uncompetitive visa offer.” This would have to change if Britain hopes to “remain a leading destination for overseas talent.”
Having promised to axe the net migration target (which had never been met) if he succeeded Mrs May as Conservative leader, Mr Javid also supported the move to let students stay for longer after university. But it was the younger Mr Johnson who forced the pace, tabling the amendment to the government’s immigration bill — designed to implement a post-Brexit visa regime — that would take students out of the net migration target. The move to allow them to stay for two years was intended to bring Britain closer in line with other nations -- the US, Canada and Australia -- that have sought-after universities.
Mr Johnson was warmly supported by university vice-chancellors who argued that the clampdown made overseas students feel unwelcome while the number of Indian students joining UK universities fell dramatically from just under 30,000 in 2011-12 to just over 16,000 in 2016-17. Mr Johnson’s amendment had the backing of opposition parties and Tory MPs, including the former chancellor, Ken Clarke, as well as his brother Boris.
With Boris now in the chair, Britain and India are waiting to discover whether he, too, fears that letting Indian students stay on will mean encouraging backdoor migration.