ON March 10th, India and the four-nation European Free Trade Association (comprising Iceland, Liechtenstein, Norway and Switzerland) signed a free trade agreement – just six months after negotiations were put on a “fast-track.”
Meanwhile, the UK-India Free Trade Agreement discussions, are once again on hold, without a breakthrough.
Thorny issues, including investment into India, visas, and agricultural goods were all thrashed out with the EFTA. They could be again, with the UK, and help achieve a similar agreement before the two countries head to the polls later this year.
In a post-Brexit world, the FTA would not only yield direct economic benefits but would also allow Prime Minister Rishi Sunak to demonstrate his ability to effectively navigate economic diplomacy. With the UK officially in recession and grappling with a growth rate of just 0.1 per cent, unlocking the potential of trade agreements outside the confines of the EU presents a rare opportunity that must be seized. Indeed, it was for the possibility of securing these agreements that Britain exited the EU in the first place.
India is the fastest-growing economy in the world. With an impressive 6.15 per cent GDP growth between 2006 and 2023, it is the fifth largest economy. At a time when recessionary pressures are dampening growth prospects in developed economies, India’s growth rate for 2023-2024 is expected to rise to 7.3 per cent.
An FTA with the UK builds upon these strengths, in times of economic upheaval, through which we are now living. Forged as a modern alliance centred around cutting-edge innovation – particularly in generative AI - and investment in technology, a future-forward FTA holds the potential for the foundation of a mutually beneficial partnership. This will channel investments into India, create knowledge partnerships between educational and research institutions in the UK and companies in India, and provide the UK with reduced tariff access to Indian markets.
A successful India can contribute effectively to the UK’s own economic prowess: if exports to India are to double, the UK could increase wages at home by as much as £3bn. This requires strengthening our bilateral tech partnership. India, an early adopter of AI, is also a leader in its deployment with 59 per cent of major Indian organisations actively using AI for business. As the UK government invests £100m in AI research, India will emerge as a crucial partner to help shape and develop practical use cases for AI.
A classic example is the use of generative AI to improve accessibility and connectivity in rural India. Speakers of Kannada, one of India’s 22 official languages, are earning around 20 times the Indian minimum wage by recording sentences on a mobile app. This is then fed into Large Language Models (LLMs) that teach gen AI to work in Kannada just as effectively as it does in English. What better partner for the UK to have in this brave new world than one leading the charge in the democratization of gen AI?
India has embarked upon an ambitious program of market reforms, with simplified taxation systems, proactive promotion of the Indian economy overseas, and an industrial policy with five-year plans accompanying an aggressive ‘Make in India’ campaign. The benefits of this policy are clear for all to see. As this moment in time, the country has recognised over 112,700 startups across 763 districts in India - making it the third-largest startup ecosystem in the world.
As CEO of one of India’s leading global business transformation companies, I am keen to work towards a future where a free flow of goods, ideas and technology strengthens the partnership our two countries already share through the Commonwealth. Hopefully, if the EFTA agreement is anything to go by, that future should not be too far away.
Keshav R. Murugesh is Group CEO of WNS and Chair of the Confederation of Indian Industry's UK India Business
