22 July 2010

Dr Gareth Price

Senior Research Fellow, Asia-Pacific Programme


One of the most striking features of the new government's foreign policy has been its emphasis on reinvigorating the UK's relationship with India - whether a 'special relationship' or an 'enhanced partnership'. This process will begin next week with the visit of David Cameron, several senior ministers and a business delegation to India.

There are some easy-wins of which the government can take advantage. In the past the UK has called on India to open up markets for those sectors (such as legal services and retail) in which the UK has a comparative advantage. India faces many domestic pressures to avoid liberalisation in these sectors, and while they are gradually being liberalised, perceived hectoring rarely helps. Concentrating instead on those sectors in which India is looking for investment - education and infrastructure being obvious examples - is likely to gain greater traction with India.

It would be hard to argue that the previous government overlooked India. However, its approach could be criticised for being fragmented and confusing. It was also thinly-spread, rather than the 'deep' relationship for which Cameron has called. A plethora of overlapping government agencies is currently responsible for helping British firms to take advantage of opportunities in India. Many Indian businesspeople express uncertainty regarding which they should talk to and see a range of bodies - the UK India Business Council, UKTI and a stack of industry bodies and regional development agencies - competing with each other rather than collaborating and selling best what the UK has to offer.

And if the UK intends to build a partnership, it needs to look at the examples of other countries. Japan has created goodwill in India through the Delhi-Mumbai Industrial Corridor, a true partnership rather than an opportunity (as has been the case in the past) to sell UK consulting services. The US is also keen to boost its relationship with India and many in India recognise that only the US could push through the civil nuclear deal, which gave India special status. The UK faces tough competition for Indian affection.

Many in India will be asking what the renewed relationship means for India's role in Afghanistan, and the UK's relationship with Pakistan. When (as now) relations between India and Pakistan are strained, third countries have found it difficult to follow a policy of 'de-hyphenation'. And previous foreign secretaries have come unstuck over the issue of Kashmir. The subject is likely to be one of the first that William Hague will have to address.

David Cameron is likely to stress the opportunities that India offers, for instance visiting its IT-hub, Bangalore. But there will need to be some significant target-based announcements in his speech. The UK and India are already committed, for instance, to cooperating in education. The challenge will be to put some flesh on the bones of prior agreements.

Related resource

Jo Johnson MP, Member, Public Accounts Select Committee will be accompanying David Cameron on his visit to India, and spoke at Chatham House on 19 July about the trip. Download the transcript below.