India’s negotiations with the UK signal not just the pursuit of commercial and economic interests, but also an attempt to lessen its engagement with China.
This is the view of C Raja Mohan, visiting research professor in Foreign Affairs at the National University of Singapore’s Institute of South Asian Studies,
Mohan notes that India has historically been somewhat reticent about trade agreements, fearing their impact on the country’s industry, even as it liberalised in the 1990s. This changed somewhat under current Prime Minister Narendra Modi, although India withdrew from the Asia-wide Regional Comprehensive Economic Partnership in 2019.
‘In walking away from the RCEP in 2019’, Mohan comments, ‘India signaled its reluctance to be part of an Asian economic integration led by China. The sharpening border conflict with Beijing as well as the fear of the Indian manufacturing sector being wiped out by cheap Chinese imports contributed to the decision. In the spring of 2020, Chinese aggression in eastern Ladakh reinforced India’s decision.’
The commencement of trade negotiations with the UK – in need of trade agreements following the exit from the European Union – reflects India’s attempts to establish other economic outlets and opportunities. This is matched by talks with Australia, Canada and Israel, as well as with the European Union.
No free trade agreement between India and the United States is under consideration, although heightened engagement between them is ongoing.
China has taken note of this. Modi writes: ‘India’s new enthusiasm for trading with the West has not escaped Beijing’s attention. Reviewing India’s new trade activism, the state-controlled Global Times said New Delhi can’t turn its back on commercial engagement with China. It pointed to the growing volume of bilateral trade, which hit $126 billion in 2021—up by nearly 44 percent over 2020 despite continuing military tensions and New Delhi’s policies aiming to reduce economic exposure to Beijing.’
The success or otherwise of the negotiations with India will be an indication of the viability of India’s strategy, Modi concludes.