High hopes of UK-India trade deal as Rishi Sunak steps into No 10

Negotiations were derailed while Liz Truss was in office over immigration row

An artist paints a picture of British Prime Minister Rishi Sunak in Mumbai, India. AP
Beta V.1.0 - Powered by automated translation

Rishi’s Sunak’s appointment as prime minister has reignited hopes of a much-anticipated trade deal between Britain and India.

Through his own family and his in-laws, the new leader of the UK’s ruling Conservative Party has enviable connections to influential figures in India.

The 42 year old is the first Hindu to serve in the country's highest office.

Born in Southampton to Indian parents who had emigrated from Africa, the former chancellor of the exchequer is married to Akshata Murty, daughter of Indian billionaire Narayana Murthy. Described as the father of India’s IT sector, Mr Murthy is the billionaire cofounder and retired chairman of tech giant Infosys.

Mr Sunak was on Tuesday soaking up congratulations from his father-in-law and India’s Prime Minister Narendra Modi, among other world leaders, after entering No 10 Downing Street.

As he cracked on with businesses and set about appointing Cabinet members, talk of a lucrative trade deal with New Delhi was the topic on the lips of many pundits.

Lord Karan Bilimoria, a British-Indian businessman, expressed hope that a deal could be on the cards.

The former head of the Confederation of British Industry told the BBC he was happy for negotiations to take longer than planned if it meant a “more comprehensive deal”.

He suggested the appointment of Mr Sunak on Diwali was “serendipity”, a sentiment echoed by British Indians celebrating the festival of lights on Monday.

When former prime minister Boris Johnson visited India in April, the two nations set a deadline of Diwali, which fell on Monday, to sign a draft agreement.

But amid political chaos, the Truss administration missed the deadline, leaving the task to fall to Mr Sunak.

Rishi Sunak at an event in north London organised by the Conservative Friends of India. PA

In July, while serving as chancellor is Mr Johnson’s government, Mr Sunak expressed high hopes for a deal between the UK and his ancestral homeland. He was “very supporting of India playing an increasing influential role” in the UK and said a free-trade deal would “prove a greater champion of that cause”.

Suella Braverman, the former home secretary, ruffled feathers when she expressed concern about a relaxation of immigration restrictions as part of any trade deal with India. She told The Spectator she had “concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit”.

“Look at migration in this country — the largest group of people who overstay are Indian migrants,” she told the magazine.

“We even reached an agreement with the Indian government last year to encourage and facilitate better co-operation in this regard. It has not necessarily worked very well.”

Her comments sparked a row, with the High Commission of India in London suggesting it was inappropriate of her to make such remarks. “While certain issues pertaining to mobility and migration are currently under discussion as part of these negotiations, any comment on these matters may not be appropriate given that the negotiations are under way and that any arrangement will include issues of interest to both sides,” the Commission said in a statement.

Ms Braverman’s words were also understood to have infuriated officials in Mr Modi's government.

At the time, the UK's Department for International Trade (DIT) said negotiations were continuing despite claims of anger in India.

Ms Braverman was later was sacked by Ms Truss for breaching the ministerial code when she sent an official document to a fellow MP from her personal email account. On Tuesday Mr Sunak rewarded her backing for his campaign by appointing her home secretary in his Cabinet.

Lord Bilimoria acknowledged the former home secretary's comments had gone down badly but sought to downplay their significance.

“The trade deal is being led by the Department of International Trade, so whoever [leads that department], that's the Cabinet minister in charge of the trade deal — and of course, the prime minister himself.”

Lord Bilimoria said a deal reflecting India's global significance had to “get to done”, pointing out how unfavourably the UK's current level of trade with the subcontinental superpower compared to its equivalent transactions with China.

“The whole idea of this FTA is to increase trade and business and investment between our countries which is only about £24 billion at the moment. That is nothing compared with where it should be.

“Our trade with China is almost £100bn and we've got a target to double the £24bn by 2030.

“[If the UK negotiates] a good free trade agreement [trade] can be many times the £24bn it is now.

Currently India is the fifth largest global economy and the UK the sixth, and Lord Bilimoria said India was “predicted to be one of the three largest economies in the world very soon.”

Rishi Sunak wins battle to become Britain's prime minister - in pictures

Updated: October 25, 2022, 4:30 PM