India-UK Trade Negotiations

Navendu Mishra Excerpts

Tuesday 22nd February 2022 Westminster Hall

[Navendu Mishra (Stockport) (Lab)]

It is a pleasure to serve under your chairship, Mr Davies. I congratulate the hon. Member for Harrow East (Bob Blackman) on securing this important debate. It is also good to see many members of the Indo-British APPG. I serve as its secretary, so I wish to declare that interest. I am also grateful to both its co-chairs, the hon. Member for Harrow East and my hon. Friend the Member for Ealing, Southall (Mr Sharma), who do a lot of work to keep the APPG going, and also to my right hon. Friend the Member for Walsall South (Valerie Vaz).

I will start by talking about the Manchester India Partnership, which covers the Greater Manchester region, including my constituency of Stockport in south Manchester. It was set up in 2018 and has won several awards. Its main objectives are to link academic institutions, businesses and public sector organisations across Greater Manchester and India. Those are excellent objectives. I am sure that the House will join me in congratulating Shehla Hasan, who has been appointed the new executive director for the Manchester India Partnership.

It is good to see the Mayor, Andy Burnham, and the 10 local authorities in Greater Manchester working with the Manchester India Partnership to attract investment into Greater Manchester, but also to attract investment from British businesses, organisations and academic institutions into organisations across India. It should be highlighted that Greater Manchester is the first UK city region to sign a memorandum of understanding with the regional Government of the Indian state of Maharashtra. That was recently signed between Mayor Andy Burnham and a Minister from Maharashtra, and should be celebrated.

As MP for Stockport, I want to see more investment from Indian businesses in my constituency into Greater Manchester, and vice versa. I also hope that when the Minister speaks, he will support the Manchester India Partnership and outline how the Government will support not only regional partnerships—such as the Manchester India Partnership—and the UK India Business Council, but also the initiative in the west midlands.

I believe that this debate is about trade, but I also want to mention the lack of air connectivity between Manchester and India. Manchester airport is the third-largest airport in the UK and serves people from the north of England, Scotland, and even Wales. Some 537,000 people of Indian ethnicity live within a two-hour drive of it. It is not good—unhelpful, even—that Manchester airport currently has no direct flights to major Indian cities. It used to have links to Mumbai and Delhi, but because of the pandemic those infrequent links, which were weekly, have stopped. I hope that the Government will do something about that. The large, vibrant Indian community in Greater Manchester and the north-west region have been calling for direct air links from Manchester to major Indian cities and, as a bare minimum, direct links to Mumbai—the trading hub of India—and the capital, New Delhi. It is a long time coming, and I hope the Government will do something about that.

Having spoken to them recently, I know that Manchester Airports Group are very keen to start routes to India. I hope there is a commitment today from the Minister that the Government will deliver that. Direct air links will deliver better connectivity for families, businesses and academic institutions. My good friend, my hon. Friend the Member for Ealing, Southall, mentioned the large number of Indian students who study in the UK, as well as businesses and people visiting on vacations. These are people who are choosing to spend their time and money here and we should make it easier for them.

Moving on to the student community, the UK has an excellent educational offer; we attract students from around the world and that is a very good thing. However, I am disappointed that the Government did not do enough at the height of the pandemic to support overseas students. Some struggled badly, and more should have been done. Some students faced extremely serious hardships, struggling to feed themselves and facing issues with rent and landlords. Several organisations, up and down the country, did a lot to support those overseas students and I am very grateful to them. I particularly thank the Indian Association Manchester: Dr Gajanan and Councillor Vimal Choksi went above and beyond to support students, some of whom were in desperate situations, and I am grateful to them for that. I think the Government should have done more, and going forward, if we are going to attract foreign students—which is a good thing—we should make sure that we are able to support them better in the case of a lockdown, in the case of a pandemic.

Over 53,000 students of Indian heritage studied in the UK last year. I believe the figure for the next academic year is close to 84,000—and that is just students from the Republic of India. That shows the growing number of students coming from India to the UK. I hope that part of the free trade agreement provides better support for those students. Over the weekend there have been some media reports about élite Indian universities setting up campuses in the UK; I hope that the Minister will outline how the Government will support that. We want the best and the brightest, and we also want to encourage the exchange of knowledge, ideas and people between those institutions.

I will finish with two points. Climate change is a very serious issue; India and the UK can do so much together to combat climate change and preserve our natural environment. I saw a report recently that India has increased its solar power capacity by more than elevenfold in the last five years; that is just one example of things that are going on in India. The UK and India could lead on green technology and renewable sources, but we need the vision and the investment.

When we talk about trade, we should do so on an equal footing and on collaborative terms. It is all well and good for the Government to say that they want to pursue a free trade agreement with India, but when recently South Africa and India made a joint proposal for a time-limited, temporary waiver of the World Trade Organisation agreement on trade-related aspects of intellectual property rights in order to allow the production of vaccines, medical equipment and medicines to fight the pandemic, the UK Government were part of a small minority that blocked the proposal. Personally, as a British Member of Parliament, I think that is shameful. On the one hand, the Government are saying that they want a free trade agreement on equal terms, while on the other they are blocking a proposal that would enable low and middle-income countries to vaccinate their populations. While we in more advanced economies talk about the second dose, the third dose or the booster dose, around 80% of people on the continent of Africa have not even had their first dose. President Biden’s Administration were with the UK in blocking the TRIPS waiver. However, they reversed their position and said that they were wrong, and that they would support the proposal from India and South Africa. I am sorry to end on a negative note, but the Government have clearly failed on that. They say one thing on the free trade agreement, but do not support a very reasonable proposal for low and middle-income countries.

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[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Harrow East (Bob Blackman) on securing this important debate and on his dramatic entrance; it is always good to get off to a start like that.

There has rightly been a lot of talk about the opportunities for friendship, trade and progressive agreements with India. Those matters should be at the forefront of our minds when we talk about engaging with any other country. It is also important, as we have heard from hon. Members around the Chamber, to make sure that when we talk about friendship and being good friends, we are open and honest and call out the things that are not acceptable. I intend to do that in my comments.

The hon. Member for Harrow East talked about the difficulties in gaining a trade agreement with India. The EU has 445 million people, the US has 331 million and the UK 68 million, so there will be difficulties in gaining agreements, and standards must not be sacrificed to get those things across the line. I welcome his comments on protecting the NHS. I hope he will work with me to make sure that the Government pay close attention to not including things such as investor-state dispute mechanisms that could undermine the NHS in future trade deals.

The right hon. Member for Chipping Barnet (Theresa Villiers) is no longer in her seat, but when we talk about being open, we have to be clear about what the situation is in India. Two thirds of Indian people live in poverty. We have to realise that not everybody there is wealthy. Nearly 70% of people live on under $2 a day. That leaves the situation open to worker exploitation. In any trade deal, we must be mindful of that situation.

Hon. Members have talked, quite rightly, about honouring agreements. That is absolutely essential. This Government must reverse some of the precedents that have been set over recent months. They have to show that they are willing to understand and undertake the conditions of international law; if they do that, they will have the moral authority to hold others to those conditions.

It is absolutely right to point out human rights issues in India. I will come on to some of the opportunities in a moment, but I will pause on the point made by my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) about his constituent Jagtar Singh Johal, who has been held for four years without charge. There are many other concerns, including the filing of criminal charges against students, journalists and private citizens in response to speeches seen as critical of the Government. As the hon. Member for Strangford (Jim Shannon) pointed out, in 1995 the EU agreed that every new trade deal would take human rights as an essential criterion. Will the Minister uphold the same principle, or will he let these things slide, as the Foreign Secretary did with the principles in the deals with Turkey, Singapore and Vietnam? The Minister should tell us.

My hon. Friend the Member for Glasgow East (David Linden) highlighted an enormous opportunity to fix a long-held barrier to exports for Scotch whisky. The punishing 150% tariffs applied to this premium Scottish export have been in place for far too long. The UK Government have been tardy, to say the least, in addressing that. We have seen no urgency from the UK Government to rectify the situation until now.

As we have heard, India is the world’s largest whisky market, and yet the quality produce from Scotland makes up only 2% of that market. Despite that, because of the vigorous marketing of high-end product by the Scotch whisky industry, the value of whisky sales has risen from less than £60 million in 2011 to more than £150 million in 2019. There is clearly a demand and an appetite for whisky in India. A reduction in that tariff would grow single malt exports by £1.2 billion in the next five years and could create 1,300 jobs, but that depends on serious action on tariffs. Could the Minister tell us what efforts are being made to remove the 150% tariff, or what reduction to it is being sought? That should not be a secret. It is not a negotiation issue; it should be something that is simply dealt with.

We have heard mentions—too few mentions—from hon. Members of climate change. This is an absolutely pivotal issue that should be at the front of our discussions. There are export opportunities for the Scottish renewable energy manufacturing sector if the conditions are put in place. The Indian Government plan to install 175 GW of renewable energy capacity this year, and they are aiming for further capacity developments over the coming decades. Currently, however, wind turbine components made in the UK are subject to import tariffs of 15% in India. Scotland has the world’s largest research group of renewable energy experts: more than 700 scientists, engineers and more. That is an opportunity.

[Navendu Mishra]

Part of the “build back better” slogan has to be good, well-paid, unionised jobs in the UK. The UK can be a world leader in green technology and technology transfer, and it can lead from the front on renewable energy. Does the hon. Member agree that as part of the free trade agreements that the UK signs with other nations, we should encourage those nations to sign up to the principles of renewable energy? Does he also agree that we should use those agreements to increase industrial capacity in the UK and produce good, well-paid, unionised jobs that support our constituents up and down the country?

[Drew Hendry]

Absolutely; I am in complete agreement about those opportunities. It is important to underline that climate change was not solved at COP26; some good agreements were reached there, but it is clear that a lot more needs to be done. All those things need to be taken into account when it comes to a trade deal. India and the UK have considerable and long-standing social, cultural and economic ties. India is a rising world power, and it is impossible and impractical to ignore the south Asian giant. However, as I have said, friendly progress should be made with eyes open to the issues that exist.

None of the proposed trade deals, including this one with India, can make up for the trade disaster that is Brexit. The Office for Budget Responsibility estimates that Brexit will lead to a reduction of 4% in UK GDP. The hon. Member for Harrow East talked about coming back from covid. By comparison, the OBR estimates that covid will only cause a 2% fall, so Brexit is likely to have twice the impact.

According to predictions by the National Audit Office, all the FTAs—those with Australia and the US, and the CPTPP—will increase the UK’s GDP by between 0.33% at best and 0.17% at worst. Brexit has already cost the Scottish economy around £4 billion and could slash Scotland’s GDP by up to £9 billion by 2030.

There are other issues, but lack of time prevents the full exposition of them all. This is a wide-ranging subject and an enormous debate, given the sheer size, scope and industry of India and the opportunities that might be opened up there. However, there are some key points that I want to touch on, so that the Minister can respond to them. These are important things.

In India, produce—rice, in particular—is grown using pesticides that are currently banned from use in the UK. Can the Minister confirm that such produce will never be imported for sale in UK shops? What concerns has he raised with his team and colleagues about microbial resistance, and will he confirm that any FTA will commit to addressing the very real concerns about it? Will he commit to ensuring that there is a robust chapter in any FTA within the legal services text that takes into account the unique nature of Scottish law?

I put those questions to the Minister. I know, and he knows, that he will be asked many more questions about this wide-ranging subject in the coming weeks and months. However, several of the questions I have asked demand an answer—not least those about his ambition for the reduction in tariffs such as 150% on Scotch whisky and 15% on renewable parts, but also those relating to human rights commitments, the protection of UK standards on pesticides and genetic modification, and ensuring that we get an open and honest trade deal that protects the human rights of those involved with it.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Davies. I find myself in the most uncomfortable position of having to praise my neighbour, the hon. Member for Harrow East (Bob Blackman), for his speech; for the first time in a long time, I agreed with more than 50% of what he said.

The hon. Gentleman and the Backbench Business Committee have done the House a service in giving us the opportunity to begin scrutiny of a trade agreement. I hope that the contributions by the hon. Member for Wyre Forest (Mark Garnier), the right hon. Member for Chipping Barnet (Theresa Villiers), my right hon. Friend the Member for Walsall South (Valerie Vaz), my hon. Friends the Members for Ealing, Southall (Mr Sharma) and for Stockport (Navendu Mishra), and the hon. Members for West Dunbartonshire (Martin Docherty-Hughes), for Glasgow East (David Linden) and for Strangford (Jim Shannon) will serve to jog the Minister’s memory about the need to improve scrutiny arrangements for the trade deals that this country begins to enter into. In particular, I welcome the fact that the hon. Member for Harrow East underlined the need to maintain environmental, animal welfare, food and safety standards, and to ensure that there is no retreat on protecting the national health service.

At the outset, let me state clearly that the official Opposition welcome and support the opening of free trade agreement negotiations with India. Given how underwhelming the Government’s record on trade has been of late, the signing of a comprehensive free trade agreement with India that could unlock significant export opportunities for British businesses and help to create significant numbers of new jobs in the UK would be very welcome. However, very few in the business community seem to have much confidence in the Government being able to negotiate any time soon the comprehensive free trade agreement that the Prime Minister has promised us all. There are increasing whispers that Ministers are focusing only on what would be billed as an interim agreement. I hope that turns out not to be true, but that apparent loss of nerve and ambition would be disappointing.

Given that Ministers have negotiated a trade agreement with Japan that, according to the Government’s own figures, is set to benefit their exporters four times more than ours; that provisions on labour and human rights have been dropped from many of the roll-over deals—a point made by the SNP spokesperson, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—and that a deal with Australia is set to deliver a £100 million hit to British farmers, fishing and food firms, Ministers should not be surprised by the growing scepticism about whether they will be able to put together a genuinely exciting free trade deal with India.

I am afraid that the story of the last 10 years of Britain’s trade with India has been underwhelming. The hon. Member for Wyre Forest, who is no longer in his place, made a pointed intervention on the hon. Member for Harrow East about the Tradeshow Access Programme, no doubt with that in mind. Figures from the House of Commons Library demonstrate that British exports to India dropped by 3% in the years between 2010 and 2019. Canada saw a 62% increase in trade with India over that time, and the French saw a 58% increase over the same period. Every other country in the G7 saw faster growth in their trade with India. There was also an average increase in trade with India across the European Union, without the EU-India free trade agreement having been made. Even Italy performed better than the UK.

After that decade of disappointment, it is high time that Ministers gave Indian markets some serious attention. It is no surprise that as far back as 2018, the Indian Government, through the High Commission here, were asking when Ministers were going to get their act together on trade with India.

Action by the previous Prime Minister on visas, of the sort alluded to by my hon. Friend the Member for Ealing, Southall, or the failure to support India’s call for a temporary trade-related intellectual property rights waiver, as my hon. Friend the Member for Stockport underlined, only add to the concern about whether Ministers are genuinely serious about engaging properly with their counterparts in India. To complement free trade agreement discussions, a strategy to boost exports to India is now needed. That can be built on if and when any agreement with India is achieved.

I hope the Minister will be able to explain, as the hon. Member for Wyre Forest asked, what extra support is being provided to firms that have the potential to export to India but are not yet doing so. If France, Germany, Italy and the EU more generally can all perform better without an FTA in terms of growth in their exports to India, Ministers need to be doing more to help British exporters. How many trade missions are planned to India in the next 12 months? Are extra staff going to be deployed to support export growth in India? How are Ministers going to improve the online help to businesses that want to export to India? I am told that it is weaker than that of our rivals.

India is one of the world’s largest and fastest growing economies, and it is set to become the world’s third biggest economy by 2050. Given that India has a population of almost 1.4 billion people and a growing middle class, a trade deal would increase British business access to a huge consumer base and, according to the CBI, potentially boost wages in the UK by some £3 billion by 2035. Got right, an ambitious free trade agreement could bolster bilateral economic growth and, given India’s regional significance, boost growth and trade with its near neighbours, too.

An agreement that sees the removal of key duties and tariffs is particularly important. As the hon. Member for Glasgow East stressed, exports of Scottish whisky and of cars, which face duties of 150% and 125% respectively, are important.

[Navendu Mishra]

The Times of London reports today that in 2020, UK companies exported pesticides containing 12,240 tonnes of seven different chemicals that are banned in the UK. Does the shadow Minister agree not only that that is morally wrong, but that it highlights the Government’s double standards on exports?

[Gareth Thomas]

My hon. Friend makes an important point. That is why we need to ensure that there is no weakening of standards as Ministers, perhaps desperate to make up for the shortfalls in the trade and co-operation agreement with the EU, seek to rush to agree trade deals with other countries.

Ministers ought to be able to make fast progress on Scottish whisky tariffs. The Government of India are keen to tackle smuggling, counterfeiting and the loss of tax revenue, so the UK Government are pushing at an open door regarding Scotch whisky tariffs. The financial sector is emerging as a vibrant and dynamic area of growth in the Indian economy, but India ranks only 30th as an export destination for UK financial services. Figures suggest that Britain exported about £3.8 billion of services to India, with financial services making up less than 10% of that total.

An ambitious agreement on services could support and complement India’s economic development. Indeed, given the UK’s strong comparative advantage in high-value services such as digital finance, a deal that does not support real growth in services exports would be very disappointing. Again, on tech, the UK and India are among the world’s leaders in the development of new technologies. An FTA could help to develop business co-operation in advanced research and manufacturing capacity, in green energy capacity in particular, as well as in artificial intelligence.

For many small businesses, improving customs arrangements to reduce bureaucratic delays and red tape is key. An FTA should include reaffirming commitments to implement the WTO’s trade facilitation agreement, to ensure that there are commitments on the timely release of goods and express shipments, and a mutual recognition of authorised economic operator schemes. On the point of mutual recognition, a comprehensive and ambitious FTA, of the type promised by the Prime Minister, should also include progress on the mutual recognition of professional qualifications and more robust regulatory dialogues.

Trade agreements are not a zero-sum game; there are trade-offs. One reason why better scrutiny of trade deals is needed is to ensure that there is proper debate about those trade-offs and the context of trade deals being done—a point underlined by the hon. Member for Strangford. One obvious issue in that regard concerns visas. The Secretary of State confirmed that nothing is off the table, and a multiplicity of sources confirm India’s continuing interest, and indeed priority, in a substantial easing of visa restrictions into the UK.

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[Mr Jayawardena]

I will address the points made by the hon. Gentleman and, indeed, by the hon. Member for Strangford (Jim Shannon) in a moment, but I want to make some progress on trade, which we are also here to discuss.

As part of the road map signed by both Prime Ministers last year, we have set the ambition of doubling our trade with India by 2030, as has been said. That provides a clear framework for our bilateral relationship in future. As part of the road map, we committed to deepening the economic relationship through an enhanced trade partnership, an ETP.

I was delighted to play a role in driving forward that partnership, which is already helping to increase opportunities for British businesses in India by tackling market access barriers, for example, allowing our apples to be imported into India once again—some say, for the first time in 50 years. The partnership has also secured improved access for British medical devices, as noted by Members; committed us to agreeing on mutual recognition of educational qualifications, as requested by the Labour Front Bencher, the hon. Member for Harrow West; and is exploring how we can increase our trade and co-operation in legal services, as raised by the SNP Front Bencher, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).

Major restrictions such as high tariffs, however, still hold us back, so a free trade deal between Britain and India holds the key to unlocking our enormous untapped trading potential. An ambitious deal could bring huge economic benefits, boosting Britain’s GDP by up to £6 billion by 2035 and delivering a triple bonus of higher wages, lower prices and greater choice for British consumers. We could slash taxes on British exports, such as whisky, whether from Scotland, Northern Ireland, Wales or even England—

[Navendu Mishra]

Will the Minister give way?

[Mr Jayawardena]

I will make some progress. Whisky and cars, from across our nation, face import duties of 150% and 125%, respectively, in the Indian market. A trade deal could give British businesses a first-mover advantage over American and European firms in India, positioning our exporters—as said by my hon. Friend the Member for Wyre Forest (Mark Garnier)—at the front of the queue to meet the expanding demand for world-class goods and services from India’s tens of millions of middle-class consumers.

Increasing trade-led growth could benefit Scotland by up to £220 million, Wales by more than £120 million and Northern Ireland by £70 million, while delivering tens of millions pounds-worth of growth across every English county, including counties in the west midlands, where a deal could bring a boost of up to £300 million, providing fresh opportunities for firms that do business with India, such as Aceleron Energy in Worcestershire and Fortress Security in Wolverhampton. Opening the door to further trade-led growth for firms in the south-east could see a boost to their collective economy of about £430 million in the long run. Such companies include manufacturer He-Man Dual Controls based in Hampshire—not in my constituency—and Larchfield Aerospace in Kent.

The trade deal has the potential to benefit SMEs, which account for 80% of British trade in goods to India in 2020. Smaller firms are disproportionately hindered by costly trade barriers and, as a result, they stand to benefit the most from a deal that cuts red tape and reduces administrative burdens.

Any agreement will be a future-facing deal, expanding the business we do with India in cutting-edge sectors that are shaping the global economy, pushing the boundaries of technological change from fintech to clean tech, automation and AI. As the world’s second-largest services exporter, Britain is perfectly placed to support Indian growth in those fields, taking our partnership in the industries to the next level.

None of that will alter this Government’s commitment to uphold British values. I said that I would address this point: we condemn any instances of discrimination of religion or belief, regardless of the country or faith involved. Where we have concerns, we raise them directly with the Government of a particular country, including the Government of India, at official and ministerial levels. That continues to be so in the case referred to by the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), which the Foreign Office has raised more than 70 times—