Negotiations between India and the UK on a potential free trade agreement (FTA) have been ongoing for over two years, aiming to enhance trade by mutually reducing tariffs on various goods such as cars, clothing, and medical instruments. However, the recent decisive victory for the Labour Party in the UK elections may shift the dynamics of these discussions.
Labour Party’s evolving stance on India
Under the leadership of Keir Starmer, the Labour Party has moved away from the contentious positions of former leader Jeremy Corbyn, especially regarding international intervention in Kashmir.
Recognizing the significant influence of the UK’s Indian-origin population, Keir Starmer has actively worked to eliminate anti-India sentiments within the party. Labour Party Chair Anneliese Dodds has expressed confidence that the party has removed members with extremist views on India, creating a more favourable environment for FTA negotiations.
On Kashmir
An important element of Starmer’s foreign policy agenda is enhancing UK-India relations. Recognising past errors, particularly Labour’s position on issues such as Kashmir, Keir Starmer has committed to establishing a new strategic partnership with India.
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Political stability and FTA prospects
Since the Brexit referendum, the UK has faced political instability, complicating trade deal negotiations with countries like India. A strong Labour victory could provide the political stability needed to finalize the FTA with India. Most post-Brexit trade deals the UK has signed have been rollover agreements, maintaining previous EU arrangements. A stable Labour government could offer the focus and continuity required to push through a comprehensive agreement with India.
Key Challenges: Visas and Climate Policy
Visas: Immigration remains a highly sensitive issue in British politics, with both major parties agreeing on the need to restrict it. India is eager to secure temporary visas for its service sector workforce as part of the FTA, which could benefit from integration with the UK’s strong IT and financial services sectors. However, given the political climate, Labour is expected to negotiate rigorously on the visa issue.
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Climate Policy: Labour Party is likely to take a firm stance on climate-related negotiations, having criticized the Tories for straying from the UK’s 2030 net-zero goals. India has requested relaxation on the proposed carbon tax, arguing that the EU-style carbon border adjustment mechanism could negate the benefits of tariff concessions in the FTA.
While Labour’s victory brings the political stability that could facilitate the signing of the FTA, significant challenges remain. Visa regulations and climate policy will be critical points of contention. Both sides will need to navigate these complex issues to reach a mutually beneficial agreement.
Reaching out to India and Indians
In an effort to mend strained ties with the Indian diaspora in the UK, Starmer undertook domestic outreach during his campaign. He condemned Hinduphobia and celebrated cultural festivals like Diwali and Holi. These gestures aim to build greater trust and inclusion within British-Indian communities, a demographic crucial to Labour’s electoral strategy.
However, challenges remain in achieving Starmer’s ambitious foreign policy goals, especially regarding immigration policies and trade agreements. With bipartisan agreement on the necessity to reduce immigration, negotiating temporary visas for Indian workers in the UK service industry presents a delicate balancing act for Labour.
