UK-India: Comprehensive Economic and Trade Agreement

Lord Hannay of Chiswick Excerpts

Wednesday 4th March 2026 Grand Committee

[Lord Hannay of Chiswick (CB)]

My Lords, it is a pleasure to follow and applaud the excellent introductory speech of the noble and learned Lord, Lord Goldsmith, the former chair of the International Agreements Committee, on which I have the honour to serve. As we see him rotate off the chairmanship, I wish to say—I hope I am not going too far and taking in vain the name of others on the committee—how grateful we are for the skill and sheer hard work that he has devoted to the chairmanship.

The International Agreements Committee is relatively new and unfortunately not matched by a similar committee in the other place. Short though its existence has been, it has been required to handle, under the CRaG procedures, some quite significant agreements, of which this free trade agreement with India is certainly one. In every case, the House has accepted the advice that the committee has given, as it will, I hope, at the end of this debate.

The free trade agreement with India is significant for at least three reasons. First, India is the most populous country in the world. It is rapidly growing, with a huge internal market, and is becoming less fragmented as a result of its Government’s fiscal policies. Secondly, India has a long tradition of trade protectionism but is slowly moving away from that approach towards our preference for freer and fairer trade, with agreements with ourselves, the European Union and the United States—although the details of the last remain something of a mystery. Thirdly, we have been able to negotiate a free trade agreement that we believe to be fully consistent with the provisions of the GATT/WTO, the world’s rules-based trade order, which is taking some hard knocks from President Trump’s regrettable lurch into unilateral tariff impositions.

Is the agreement perfect? Certainly not, as the noble and learned Lord, Lord Goldsmith, said. It lacks substantial and effective provisions for trade in services, particularly legal and financial services. Services make up 80% of our economy, hence the need to treat this agreement not as an end point but as a living instrument that can be improved to mutual benefit over time. I hope that when he replies to this debate the Minister will confirm that that is how the Government will treat it.

Does the agreement risk flooding the UK with migrant workers? It does not do that, since the provisions of the agreement are largely limited to intra-company transfers similar to those that we already have with many other countries, to our and their mutual benefit.

Will the gains to the British economy, which are admittedly not enormous and in some cases not immediate, fall into our laps? They will not. They will materialise only if the Government give advice and support, in particular to small and medium-sized enterprises, to penetrate what is a complex and often difficult market. That will require a systematic effort by the Government’s export promotion functions and by the offices of our high commission in India, including its regional branches. Can the Minister say what we are doing to mount that effort?

Straying now a little on to two points that are a bit wide of the precise subject of this debate, I would like to ask whether we should not be using our very welcome membership of the CPTPP to bring both India and the European Union into the ranks of its members. It is often said that CPTPP members do not take positions on other countries’ membership, and I understand very well that the figure of China and Taiwan lurks in the background of that view, but it is slightly absurd. It must be the only membership organisation that I have ever come across where the members do not take a view about future members. I would like to hear what the Government have to say about the prospect of both the EU and India joining. I point out that, if India were to join the CPTPP, that would go quite a long way towards remedying the problem over the lack of provisions on services in this agreement.

Straying a little further again, I would like to point out that the Government’s trade policy and free trade agreements seem not to have reached Latin America. Yet the European Union has just included a very ambitious and important agreement with Mercosur, which is likely to be beneficial to both sides. I believe that a similar agreement could be very beneficial to us. I would like to hear from the Minister whether that is somewhere on the horizon of our future trade policy.

I do not want to close without a wider glance at the inadequacies of the CRaG process, although we will have an opportunity to debate them again on 16 March. The 21 working-days limit for the committee to take evidence and produce a report and for it to be debated is, frankly, absurd. It is absurdly short. In the present case, problems were avoided thanks to the Business Department having co-operated in briefing the committee about the content of the agreement before the CRaG procedure was triggered, but that does not always happen. Sometimes, we get a situation where, I am ashamed to say, as happened on one occasion, we have had to produce a report without taking any evidence at all because there was no time or opportunity to do so. But that is for 16 March. I would like there to be an agreement soon between us and the Government that, as a general rule, the Government will grant one additional 21-day period unless there is an overriding national interest not to do so. I hope that the Minister can reflect on that and discuss it with his colleagues before we meet on 16 March.