Brexit: hoist by an Indian petard

By Richard North - April 11, 2023

If there was such a thing as the “crown jewel” in the Brexit settlement, it was the ability of the UK to craft a lucrative trade deal with India, something which the EU had singularly failed to do, having originally launched negotiations in 2007 which never came to a conclusion.

All the same, it took until January 2022 for Johnson’s administration to announce the launch of negotiations on an “ambitious free trade agreement”.

India, we were told, is one of the world’s biggest and fastest-growing economies and a bold new deal would put UK businesses at the front of the queue to supply India’s growing middle class, forecast to increase to a quarter of a billion consumers by 2050.

An agreement, the press release warbled, will create huge benefits for both countries and could boost our total trade by up to £28 billion a year by 2035 and increase wages by up to £3 billion across the UK.

Three months later, in April – with the war in Ukraine in full spate – the Financial Times was reporting that Johnson had ordered his negotiators to push for a trade deal “by Diwali in October”.

Dogged by political problems at home, Johnson was meeting Indian premier Narendra Modi in New Delhi and, anxious not to offend his host, he steered clear of the vexed issue of Ukraine despite Modi’s refusal to condemn Russia’s invasion, calling him “khaas dost”, or “special friend”.

Johnson, the FT asserted, was hoping that talk of more trade and greater co-operation with “the world’s biggest democracy” would show he was focused on the bigger picture, thus deflecting attention from his domestic troubles.

Less than three months later, though, Johnson had resigned and, by October – after a brief hiatus while Truss sought to wreck the economy – the Indian heritage Rishi Sunak had taken over as prime minister.

On the face of it, Sunak might have seemed the ideal person to forge ahead and conclude a deal with Modi, but that was not to be. In November, with the “deal for Diwali” consigned to history, Sunak was signalling that he was prepared to slow down progress on the deal to improve its terms, saying the UK should not “sacrifice quality for speed”.

With that – despite a promise of imminent completion – the India deal slipped down the news agenda, consigned to the unfinished business file, although there was muted talk of closure by March of this year.

Come the 6 March, though, all we got was a short, low-key press release telling us that, on 10 February, the parties had concluded a seventh round of talks.

Technical discussions had been held across 11 policy areas over 43 separate sessions, including detailed draft treaty text discussions in these policy areas. But the only promise made was that there would be an eighth round of negotiations, which was “due to take place later this Spring”.

That eighth round seems to have concluded on 31 March, although there does not appear to have been any official statements. But now, it seems, further progress may be in doubt. According to The Times yesterday, India has decided to suspend trade negotiations after accusing Britain of failing to condemn a Sikh extremist group that attacked the Indian high commission in London last month.

This was an incident recorded on 22 March when supporters of the Khalistan movement, which calls for a secession state in the Punjab, injured two security guards and broke windows at the building in during a protest a few days earlier.

The event was hardly the stuff of front-page headlines, but it had a senior British diplomat in Delhi summoned to receive an official protest and, it appears, a demand that the British government should publicly condemn the separatist group.

There is no official confirmation from the UK government of the latest Indian move, but a report from a Delhi-based journal, The Statesman, has an anonymous Indian government source denying the claims from The Times.

Nevertheless, the British paper is quoting multiple “senior British government sources”, although these are equally anonymous. They are claimed to have said that the Indian government has “disengaged” from trade talks and made it clear that there would be no progress without a public condemnation of the Khalistan movement.

The Times then cites a Whitehall source speaking after the latest round of talks at the end of last month. He held that: “India has said they don’t want to speak about trade, they don’t want to do trade negotiations because they think it’s part of a wider problem of us not taking the attack against the Indian high commission and the wider Sikh separatist movement seriously”.

This source continues: “Indians don’t want to talk about trade until they get a very public demonstration of condemnation of Khalistan extremism in the UK. I wouldn’t underestimate the strength of feeling on this. They’re expecting the government to say something on Sikh extremism before they come back to the table seriously”.

In response, it seems that the Home Office is planning a crackdown on Sikh extremists and is preparing an announcement in the coming weeks. But, says the paper, this is one of several problems that have slowed talks about a free trade deal with India.

The talks have also hit a snag over demands for Indians in the UK on worker visas to be exempt from paying national insurance. India has said it is unfair to charge Indians working in the UK temporarily the same rate as British workers when they will not benefit in the form of pensions or healthcare.

However, trade negotiators have stood firm, seeing it as a red line because to give in would encourage other countries to seek similar arrangements, a move that would cost the Treasury at least £500 million a year.

But there is a third issue that is said to have dented progress. In January, the Indian government invoked emergency laws to block a BBC documentary examining the role of Modi, during riots in the western state of Gujarat in 2002.

The BBC had uncovered memos showing that Modi’s conduct was criticised at the time by western diplomats and the British government, including in a government report which found that the riots had “all the hallmarks of an ethnic cleansing”, after almost 1,000 Muslims had died in violence across the state.

And herein resides a gigantic elephant in the room. While there has been overt British condemnation of the Chinese state persecution of its Muslim Uyghur population, much less has been said about India’s emerging “Islamophobia”, and claims that Hindu nationalist Modi is marching “toward Muslim genocide”.

This has been a long time coming but it is now feared that Modi’s government is actively fomenting violence against India’s 200 million Muslims, spilling over into Kashmir.

As anti-Muslim measures proliferate, the situation has the potential to deteriorate markedly in the run-up to the Indian general election in May next year, despite some attempts to court the Muslim vote. Modi is said to be sitting on top of an anti-Muslim consensus (within the state), with his popularity flowing from this.

Modi’s BJP party has been systematically isolating the Muslims since the success of the Ran Janmabhoomi Movement in the 1990s which catapulted the BJP party to national prominence, and the Gujarat riots of 2002.

Although the UK government remains publicly committed to securing a trade agreement with India, the potential for political embarrassment in securing a high profile deal with a potentially genocidal state may not have escaped the FCO.

A situation where India is seen to break off talks, therefore, could be seen as a welcome relief, which might explain why officials are to be found briefing The Times. Something tells me we haven’t heard the last of this.