UK-India: Comprehensive Economic and Trade Agreement

Lord Howell of Guildford Excerpts

Wednesday 4th March 2026 Grand Committee

[Lord Howell of Guildford (Con)]

My Lords, as a member of the committee that produced this report, I congratulate our former chairman, who has just spoken, for guiding us through an extremely complex and quite prolonged report on a wide variety of subjects. We think that it is about trade, but the truth is that trade is security, security is confidence, confidence is stability, and stability is investment, expansion and peace. Therefore, this is inevitably just a visible part of a much larger subject area. It is an absolutely excellent report. Of course, I would say that anyway but, having spent 60 years in this Palace—40 of them on committees and the remaining 20 in or out of the Government— I think that this is really one of the best reports that I have ever read. I am not exaggerating that nor just saying it because it is a nice thing to say.

I want to concentrate a little more than the chairman did on, not so much the detail, but the proposition—found in paragraph 223 on page 48—that the whole agreement has to be understood within the wider context of the UK’s evolving relationship with India. This is really the point. We are talking here not just about another country and another FTA, but a relationship with an enormous country, which goes back hundreds of years. It is, in population, the largest of all and is obviously set for great things as it grows increasingly fast and increasingly finds itself at the centre of the world, certainly in its foreign policy as it seeks a balance between the autocracies and the liberal capitalist world, and to do so with some considerable skill—although there are one or two areas of criticism as well.

I think it was Governor Carney, now Mr Carney the Prime Minister of Canada, who was talking the other day about the knowledge and potential power of the middle-power nations. It is not all a game for the big boys, for China, America or even Russia. Mr Trump loves to say, “We’re holding all the cards; you don’t have any cards”, but it is not true. If the middle-ranking powers in influence work together increasingly, as we are trying to work with India, there will be a number of very valuable cards that we can and should play, contrary to dealing with Mr Putin or Xi Jinping. These are things that we should not just give up, saying “They are big; they are going to decide”—they are not. This is not necessarily the age of great powers that the President of the United States thinks it is. For a start, the Commonwealth is 56 nations and 2.6 billion people, of whom more than half are Indians inside the great Indian nation. There are many other areas of technology where they are beginning to take the same kind of lead as we now associate with China.

If I have any regrets about shortcomings, to add to the points made by our chair, I would have liked to see, first, a little more about the role of the Commonwealth in the future pattern of things, which I think will be much greater than people realise or understand, partly because, in the digital age, you cannot overcentralise to the degree that some organisations are trying to do or have tried to do and failed. Secondly, there are specific issues—dare I even mention the controversial Chagos Islands and the whole north Indian Ocean—where the Commonwealth, and India in particular, might have had a much bigger role to play if they had been consulted and things had been discussed with them in the way that we discussed this FTA with them.

Sadly, as the chairman mentioned, when it comes to services, not much is said. This is a huge omission because services come into every goods package as well. We have been through a curious phase, first, with the statisticians of the world not recognising services at all; then bundling them in with goods; then taking them out again; and now we are through to a fourth phase where everything is riddled with, filled with, loaded with services. You cannot even export a bunch of bananas without a large degree of the service element as well. There should therefore be a little more understanding that not only do services come into absolutely everything—all trade of every kind—but they are mixed with goods, inevitably. Of course, there is also the omission of legal services. To some extent, these things are dealt with in the other agreement that HMG made with India in July 2025, which we now call, rather grandly, a comprehensive strategic partnership. That deals with strictly non-trade issues, particularly cultural issues, which are extremely important.

We should have said a little more about climate and the desire to get emissions down. If one is looking at the source of ever-rising emissions, it is not this country, nor many countries, but India certainly is one of them. What India needs, with about 1,000 coal-fired stations, is the low-cost technology for carbon capture and storage. We are rather good at that, and we could have perhaps spent more money and effort on that, if we really want emissions down, rather than spending it on rather more splendid things that sound good but do not contribute at all to the world’s reduction of emissions.

I would like to have seen a lot more on small and medium-sized businesses, which the chairman mentioned. The other day I think I heard a Minister—I hope I will not be pressed for a name or any detail—respond to the question of what proportion of our businesses are SMEs by saying, “About 70%”. That is completely wrong. According to official statistics, 99.18% of businesses in this nation employ fewer than 50 people. Businesses employing 50 to 249 people make up 0.67%, and large businesses 0.15%. In other words, more than ever, modern economies are overwhelmingly comprised of small enterprises, and it is their interests and concerns that should be at the centre of our evolving relationship with India.

Finally, I remind noble Lords that India is the biggest democracy. It is using AI and other technologies to, among other things, speak simultaneously in 30 languages to its vast electorate. The India of the future is a glittering prospect and one that deserves both respect and friendship. Friendship has to be worked at, night and day, and we have to work a lot harder than we have done in the past. The report is a step on the way and I am very honoured to have been involved in its production.