Why the India trade deal is good for Labour

Spectator

2 days ago

A nice fillip for the government today as it settles into the summer recess. After three and a half years of negotiation, the UK has signed a free trade deal with India. It will open up trade for cars, whisky, clothing and food products, with ministers claiming it will boost the British economy by £4.8 billion. For Keir Starmer, it offers a much-needed economic and political boost. For Narendra Modi, it shows that the £3 trillion Indian economy is willing to shake off its protectionist tradition and open up to international investors.
The trade deal is an all-too-rare example of Labour getting things right in opposition. Jonathan Reynolds, the Trade Secretary, met with his Indian counterpart, Piyush Goyal, in February last year. He made it clear that Labour would support the Conservative government if it finalised a trade deal with India – and would pick up the negotiations after the election if it didn't. Despite much ground being covered, Rishi Sunak could not succeed where Boris Johnson and Liz Truss failed and get the talks over the line by July 2024. At that point, Reynolds took over, wrapping up the deal in just 12 months.
Talks have been protracted for multiple reasons. India's average tariff rate is 13 per cent, compared with the UK's 1.5 per cent. Immigration has previously been a major sticking point, according to Kemi Badenoch, with today's deal facilitating some 1,800 annual extra visas for Indian yogis, chefs and musicians. Then there was the exemption on national insurance contributions: a subject of some controversy back in May. Today's agreement means staff from Indian companies who are temporarily transferred to the UK, and staff from British firms who are temporarily working in India, will only pay social security contributions in their home country, rather than in both places. The UK already has similar reciprocal 'double contribution convention' agreements with 17 other countries including the EU and the US. But that reaction was one reason why few in London and New Delhi expected this deal to be done so soon.
The best testament to Labour's success is evidenced in the reaction of the opposition. In his reaction, Andrew Griffith, the shadow business secretary, admitted today's agreement is 'a step in the right direction' – before claiming that Labour's Employment Rights' Bill will outweigh any potential wins. For the government, securing this deal offers a winning narrative. Starmer will cite it as proof that hard work and careful planning can produce results in office. It also can help build relations between his party and British Indians, following the 2019 outcry over Jeremy Corbyn's perceived support for Pakistan over Kashmir.