The UK secured a free trade deal with India as international trade minister Liz Truss agreed to an enhanced trade partnership during a five-day visit to the country. Truss and Piyush Goyal, India’s commerce and industry minister, signed an enhanced trade partnership (ETP) which marks a step on the road towards a potential comprehensive free trade agreement between the two nations.
The Department for International Trade (DIT) confirmed the agreement, with the easing of UK visa rules reportedly holding the key to agreeing on a full free trade deal in the future. The Home Office scrapped the resident labor market test for the new skilled worker visa in December 2020 and will introduce a new post-study work visa in the summer. These measures, featured in the new Immigration Act, will make it easier than before for non-EU migrants to come and work in the UK.
The government released a joint statement with India earlier this week stating that the trade ministers had “committed themselves to make concrete progress on the trade and investment front to deliver quick gains for both countries, including joint timelines for further advances”. The partnership will be formally launched during the visit of prime minister Boris Johnson to India later this year.
With the scrapping of the resident labour market test from the Tier 2 visa requirements in December, the introduction of a two-year student work visa from this academic year, and the lower thresholds in the new Immigration Act, it is considered that it will be easier for non-EU migrant workers to come to the UK than previously.
Yash Dubal, director of immigration specialists AY&J Solicitors said “There has been a marked increase in inquiries from Indian citizens who want visas to work in the UK and this is all driven by specific relaxations in UK immigration rules. When you analyze the details of the new system it is apparent that certain measures have been put in place to encourage more people to come here, rather than to deter them – which is the message the government would rather people believe”.
In the past, strict UK visa rules have been a barrier to any trade agreement with India. However, during a recent trip to India, Liz Truss was able to secure an investment from Mumbai-based steel and tech firm, Tata Consultancy. Tata is already one of Britain’s biggest employers. The investment will see the creation of 1,500 skilled tech sector jobs in the UK. Meanwhile, Truss also agreed to relaunch the UK-India CEO Forum.
Trade with India was worth £23 billion in 2019 and supports key industries such as technology and life sciences and around half a million jobs in each other’s economies. In 2019-20, the UK was the largest European market for India’s goods exports. The UK government says that UK exports to India increased in value by nearly a fifth (19.3%) between 2017 and 2018, amounting to £8 billion in total. Of these, nearly 70% were goods, with total goods exports from the UK to India totaling £5.5 billion in 2018 (ONS, 2018).
The size of the country makes it an appealing market for the UK, with some commentators believing trade between the two countries could be much bigger.