India-UK Relations : Political, Bilateral & Trade Relations | UPSC Notes

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India-UK Relations : Political, Bilateral & Trade Relations | UPSC Notes

• India and the UK have a lot in common in terms of history, language, culture, and values. This gives the UK a big edge over other countries when it comes to helping India become a world power and profiting from it.

• Cultural, educational, and people-to-people connections are good ways to build a friendship that will be good for both sides in the future.

• In the early 1990s, as the world changed, so did India. It changed and adapted to fit the new world. The UK saw how important India is and how it can help them. So, cooperation and the desire to improve the two countries’ relationships got a new boost.

• Since then, the relationship seems to be always changing, with deeper unity, more trade between the two countries, and well-connected markets. From the UK’s point of view, India went from being a growing country to a major economic and political power.Recent efforts to strengthen military cooperation and deepen ties in the fields of defence and security have given a new dimension to the relationship between India and the UK, giving their partnership a real strategic dimension.

• The visits of the Indian Prime Minister in 2015 and the British Prime Minister in 2016 have given the friendship a boost.

Areas where India and the UK can work together

Relationships between India and the UK can be put into five main groups: political, economic, science and technology, defence, and diaspora.

Political

• The UK has had a big impact on the way Indian politics work. In India’s constitution, things like the Parliamentary government, the Cabinet system, bicameralism, etc., were taken straight from Britain. Aside from those things, the world’s oldest democracy and the world’s largest democracy are strongly linked by their shared democratic ideals.

• India thinks of the UK as an important ally in foreign politics. The UK is a permanent member of the UN Security Council (UNSC), and it backs India’s efforts to get a stable seat on the UN Security Council and to join the Nuclear Suppliers Group (NSG). They also agree on a number of global issues, such as rule of law, democratic principles, tolerance, and respect for human rights.The Commonwealth is also a place where people work together. It helps India’s economy grow by giving expert help and scholarships to Indian students.

• In 2004, the two countries’ relationships moved up to the strategic level. Since then, they’ve signed a document together called “India-UK Towards a New and Dynamic Partnership.” In it, they agreed to hold a yearly summit and meet regularly as Foreign Ministers.

 “Enhanced Partnership for the Future” was the name given to the relationship in 2010.It also talks about how the two countries can work together in the future on things like defence, joint military exercises, sharing information and strategies against terrorism, space, education, trade and commerce, science and technology, and cultural exchanges. • The UK gives India some of the most help and aid in the world. It mainly focuses on reducing poverty, empowering women, developing technology, improving infrastructure, etc., which helps India in the most important areas of development. Despite the challenge of the Ukraine crisis, relations between India and the UK have been getting better, as shown by the signing of a Comprehensive Strategic Partnership in 2021.The deal also set up a “Roadmap for India-UK Relations to 2030,” which mainly shows how the two countries plan to work together.

Some examples of bilateral institutional engagements are:

• The India-UK Disarmament and Non-Proliferation Dialogue talks about things like the NPT, civil nuclear cooperation, INF and New START, CWC and BWC, JCPOA, the Gulf, DPRK, China, Pakistan, and export licences.

• The India-UK JWG on Counter Terrorism condemns terrorism in all of its forms and manifestations, shares ideas about the threats made by terrorist groups that are banned around the world, and promises to continue working together.India and the UK also meet regularly under the UN Dialogue, Policy Planning Dialogue, Strategic Dialogue, Cyber Dialogue, and Home Affairs Dialogue to talk about how they can work together in certain areas.

Defence

• In 1947, India got rid of the British Raj and started its own foreign and military policy. This policy was called the Non-Aligned Movement (NAM).

India’s policymakers chose this method because they didn’t want to get caught in the middle of the cold war between the big powers.

• In 2004, after the end of the Cold War, the two countries made a deal to work together.

Annual talks and meetings between heads of government and foreign ministers were planned, as well as cooperation in areas like fighting terrorism, civil nuclear activities, and civil space programmes, among others.

• The UK is an important partner in making the world a safer and more peaceful place. Both countries face similar security threats and challenges, such as terrorism and extremism. Because of this, they have reaffirmed and strengthened their defence cooperation, which is based on capacity building, technology development and transfer, joint military exercises (Ajeya Warrior-Army, Konkan-Naval, and Indradhanush Force), sharing intelligence, and other things.

• India thinks that the military sector is one of the most important areas where the ‘Make in India’ campaign could lead to more cooperation between the two countries.

• Around 70 defense-related companies in the UK supply HAL with things like ejection seats, fuel tank kits, hydraulic pumps, engine spares, and so on. These companies also serve older platforms like the Jaguar, Mirage, and Kiran.

• During the 2015 visit of the Indian Prime Minister, the two countries decided to move towards “a new Defence and International Security Partnership.” This would mean that they would work together more on defence and security, including cyber security and maritime security, and try to work together in key strategic areas.

• Another area where people are getting more involved is in maritime cooperation. This year, the UK is sending a Carrier Strike Group to the area around the Indian Ocean. This is part of its strategy shift towards the Indo-Pacific.

Nuclear Cooperation:

Both countries signed a Civil Nuclear Cooperation Declaration in 2010. This will help promote and ease cooperation in the nuclear field, including nuclear trade and cooperation between the scientific organisations of the two countries.

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• Also, in 2015, the Prime Ministers of the UK and India signed a Nuclear Collaboration Agreement. This was part of a larger agreement to work together on energy and climate change. The deal is worth a total of 3.2 billion pounds and includes joint research programmes and ways to share technical, scientific, financial, and policy expertise.

Extremism and terrorism

• India’s relationship with the UK has been mainly about the threat of terrorism.

• Threats from ISIS, fundamentalist groups, lone wolf attacks, and terrorism backed by the government, among other things, have made it hard for both countries to live in peace and unity.

• The terrorist acts in Mumbai and London show how important it is for countries to work together on defence and security.

• Both countries are working together to get the UN’s Comprehensive Convention on International Terrorism (CCIT) and are holding yearly consultations to improve strategic cooperation and share information.

Cybersecurity:

• Because India is getting more and more computerised, cyberspace is becoming a bigger problem.

• The dangers to things like stock markets, hospitals, nuclear power plants, and so on are getting worse.

• The MoU between CERT-ln and CERT-UK will make it easier for India and the UK to work together and share information and experience about how to find, solve, and prevent security-related incidents.

• The UK supports the government of India’s “Make in India” initiative and wants to help India build up its defence manufacturing capabilities through capacity building, technology transfer, joint ventures, and other ways to work together. • This will help India become less reliant on other countries for Defence equipment and technologies and more self-sufficient.

Economic:

Now that the UK has left the European Union, it’s more important than ever that it strengthens its relationship with India, which has one of the world’s fastest-growing economies, a huge domestic market, and the world’s largest middle-income population. In 2005, the UK and India set up the Joint Economic and Trade Committee (JETCO) to break down trade and investment barriers and promote business.

• The first round of talks for an India–UK Free Trade Agreement came to an end in January 2022.

Both the UK and India, which have the fifth and sixth biggest economies in the world, wanted to reach a comprehensive deal during the talks.

Bilateral Trade:

• Bilateral trade between India and the UK has grown a lot since the early 2000s. But there is a lot of room for change when you think about how much trade there could be between the two countries.

• In 2021, India and the UK did a total of USD 13.11 billion worth of business.

• As of 2021, India is the UK’s 15th largest trading partner, and the UK is India’s 18th largest. Over 90% of India’s exports to the UK are made in India. These include clothing, medicines and pharmaceuticals, metal manufacturers, organic chemicals, and precious stones.

India’s main exports to the UK are cotton, ready-made garments and textiles, transport equipment, spices, ores and minerals, manufactured metals, machinery and instruments, drugs and pharmaceuticals, and marine products. The UK’s main exports to India are ores and metal scraps, pearls and semi-precious stones, professional instruments other than electronics, non-ferrous metals, chemicals, and machinery.

• Trade in services between India and the UK has been less than trade in things, but it has grown quickly since 2003.

• Many big British companies have sent work to India, which has made a lot of jobs.

Investments:

India was the UK’s third biggest contributor. India puts more money into the UK than it does into the rest of the EU as a whole. On the other hand, the UK invests more in India than any other G20 country.

According to a study from DIPP, FDI into the UK from April 2000 to December 2017 was worth USD 25.31 billion. This was 6.88% of the total FDI into the UK during this time.

• The FTSE SBI Bond Index Series was introduced to help India’s growing business bond market grow.

• India and the UK revealed the start of an Early Market Engagement for the joint UK-India Fund, which is a Green Growth Equity Fund that will use money from the private sector to invest in green infrastructure projects in India.

• About $3 billion worth of bonds priced in rupees have been sold in 2017, and $2 billion of those bonds are listed in London. This will help London become the most important place in the world for offshore rupee banking.

• The Indian High Commission in the UK and its knowledge partner, the UK India Business Council (UKIBC), have started the Access India Programme (AIP). This will help small businesses that want to grow into the Indian market get started there.

• Institutionalised ways for India and the UK to work together on economic issues are: Setting up a Joint Working Group that reports to JETCO (a joint economic and trade council led by the trade ministers of both countries)

Indian and British companies work together to put India’s flagship programmes like Smart Cities Mission, Make in India, and Digital India into action. They also work together on other important areas like healthcare, infrastructure, and job development.

Steps Needed to Boost Investment Relationships

• The best way to speed up foreign direct investment (FDI) is to make India’s business setting better.

• The UK-India Business Council advises the following focus areas:

The company tax rate would go down to 25%.

The ease of doing business will improve if GST is put into place in a fair and smooth way.

A tax system that is easier, fairer, and more reliable

Long-term and medium-term clarity in areas where the government spends a lot of money, like security, and on plans for building up infrastructure.

• Aside from these, there is a lot of room for India and Britain to work together in the following areas: Health, especially in the medical fields, Education and research, Infrastructure, Renewable Energy, Skills, Information Technology, and Tourism.

Education:

This began when the Science and Technology Agreement was signed in 1996.

In 2006, the “Science and Innovation Council,” which is the main structure for India-UK Science and Technology cooperation, was set up. This gave S&T cooperation a new direction.

• At the UK-India Summit in 2010, the Prime Ministers of both countries agreed to support education by putting the India Education and Research Initiative (UKIERI) into place.

• The UK is one of the most popular places for Indian kids to go to college.

There are about 50,000 Indian students in the UK right now.Also, the UK sees India as a key partner for growth. Also, the two sides are talking about the Global Innovation Programme, which will help Indian sustainable ideas be scaled up and sent to some developing countries.

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Climate and Environment:

• India and the UK work closely together on climate issues through the Ministerial Energy Dialogue and the Joint Working Groups on Climate, Power, and Renewables. • The India-UK Green Growth Equity Fund is getting institutional investments in renewable energy, waste management, electric mobility, and the environment in India.

Health

• Collaboration in the health industry is a key part of the India-UK Strategic Partnership. The Joint Working Group on Health and Life Sciences meets regularly to set priorities for bilateral cooperation in the health sector and to manage this cooperation.

• The successful collaboration between Oxford University, AstraZeneca, and the Serum Institute of India on the Covid19 vaccine showed how knowledge from India and the UK can be used together to solve problems around the world.

• The two groups are also working on preparing for pandemics, Antimicrobial Resistance (AMR), Zoonotic research, non-communicable diseases, digital health, Ayurveda and other alternative medicines, and the mobility of health workers.

• During the visit of the Indian Prime Minister to the UK in November 2020, they started the “Ayuryoga” project and online modules to help more people in the UK learn about and use Ayurveda and Yoga.

Culture

• In 2010, India and the UK signed an agreement to work together on culture.

• The High Commission of India in the UK set up the Nehru Centre (TNC) in London in 1992. It is a cultural outreach programme of the High Commission.

 At its location, the Centre hosts a wide range of artistic events.

• Also, out of the 62.3 million people who live in Britain, it is thought that between 1.8 and 2 million are of Indian origin, making them the biggest ethnic group.

• In 2017, the official start of the UK India Year of Culture was held at Buckingham Palace. The Queen of England and the Indian Finance Minister were there.

People to People Contact

• The Indian Diaspora in the UK is one of the biggest groups of people who aren’t British. They have a lot of power over votes and policies in the UK, especially when it comes to India.

• The UK has one of the biggest communities of Indian students. Most of them go to school in the fields of medicine, engineering, and management, which makes the UK’s workforce more talented, valuable, and efficient. People from both countries get together through things like cricket, Indian food, yoga, and events.

• Indians think of the UK as one of their favourite places to visit all over the world.

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Significance of Britain to India

• The UK is a regional power in the Indo-Pacific because it has military bases in Oman, Singapore, Bahrain, Kenya, and the British Indian Ocean Territory.In the world we live in now, where international relationships are always changing, India needs a reliable partner like the UK. India wants to be on the UN Security Council and join the Nuclear Suppliers Group, both of which can’t happen without its help.

• As the second biggest G-20 investor, the UK gives India the foreign money it needs, especially in the areas of technology, manufacturing, services and IT, renewable energy, and defence.

• The UK is a leader in the production of military weapons and nuclear technology. It will help India buy different kinds of defence equipment by supporting the transfer of technology and building capacity. This will help India make its own defence equipment and become less dependent on other countries.

• India is changing in many ways right now. For example, they are building smart cities, encouraging companies to make things in India, getting the country online with digital India, improving healthcare, infrastructure, skills, and finance, developing clean and renewable energy, Swaccha Bharat, the river clean Ganga mission, and many other things. With its world-class builders, lawyers, financiers, engineers, doctors, academicians, and tech experts, the UK could be a great partner for India and help it reach its goals for the projects listed above.

• London is still the most important financial centre in the world. The UK will play a very important role in India’s growth and investment when it comes to getting cheap loans and shares of stock. The Indian Rupee-based Masala Bonds were put on the market in London. This money can go towards building up India and other places where it can be invested.

• The UK’s security network and system are very large and have a lot of different parts. India can be very successful in fighting terrorism, insurgencies, and natural disasters by working with the UK.

Significance of India to Britain

• Britain is changing its place in the world after Brexit, and it wants to bring the Commonwealth back to life. India’s help is very important for this to happen. India, which will soon have the biggest economy in the forum, can do a lot more to help the economy. It can give more money to keep the Secretariat running, help build more skills, and open its economy to make it easier for trade liberalisation across the Commonwealth.

• A good FTA with India would help Britain reach its ‘Global Britain’ goals. Since Brexit, the UK has been trying to grow its markets outside of Europe.

• Britain has been trying to take advantage of opportunities in the growing economies of the Indo-Pacific to show that it is a major player on the world stage.

 If the British and Indians got along well, they would be better able to reach this goal.

• India is the third largest investor in the UK and the second biggest international job creator. Over 110,000 jobs in the UK are made by Indian companies. India puts more money into the UK than it does into the rest of the EU as a whole. If the UK leaves the EU, working together and having strong links with India will be even more important for the UK.

• India’s huge number of young workers could help the UK with its ageing population and labour force. • The UK’s slow economic growth and slow recovery haven’t stopped people from worrying about a double-dip recession, while India’s growth is expected to keep going up from an average of 7%.

• India’s large number of workers and its large population are good for the UK.

In UK universities, a lot of Indian students are taking professional classes like engineering, management, and medicine. As an industrially advanced and developed country, the UK has a lot to gain from the pool of Indian professionals.

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Problems between India and the UK relations

In addition to opportunities, the relationship between the countries faces challenges in areas like immigration, taxes, extradition, solving BTIA problems, etc.

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Visa Issues

• India is interested not only in ways to increase trade in goods, but also in ways to increase trade in services, such as by making it easier for skilled workers to move around.

• Britain revealed changes to its immigration rules, such as higher salary thresholds, that are likely to affect Indian professionals and IT companies, especially those who use the Intra-Company Transfer (ICT) visa. Indian tourists, students, business travellers, and academics all have to pay more for visas than people from other countries, such as China.

• After leaving the EU, Britain wants to end “freedom of movement for good,” which is one of the EU’s most important ideas.

The ability of workers and their families to come to the U.K. will be limited even more by a new system. Any family will have to be sponsored by the company.

• If it ever happens, it will be a skills-based system where the skills of workers count more than where they come from. This could help the pool of skilled Indian professionals.

Retrospective Taxation:

• Britain has told the Indian government about the tax issues between Vodafone Group PLC and Cairn India Ltd.

• The UK wants the review process to go faster. The Indian government has taken steps like the Insolvency and Bankruptcy Code to fix these problems.

Trade barriers

• If the UK leaves the EU, it may be able to sign a bilateral trade agreement with India to get rid of some of these hurdles. However, it is very unlikely that a full deal will be made in the near future.

• India has only nine bilateral trade agreements, and none of them are with a Western country. It has made it clear that it is not “in a hurry” to make a deal with the UK, and that it will ask for changes on the movement of people, which has been a sticking point for the UK in trade talks between the EU and India.

Extradition:

The problem is the extradition of Indian economic criminals who are hiding out in Britain and taking advantage of the legal system.

Vijay Mallya, Nirav Modi, and other criminals have been hiding out in Britain for a long time, even though India has clear cases against them that call for their return.

• India hopes that the UK will send businessman Vijay Mallya back to India quickly so that he can be investigated for money laundering. This is because India and the UK agreed not to let fugitives and crooks get away from the law and to make it easier to get extradition requests.

• Former IPL Chairman Lalit Modi is also avoiding the law in India, and the talks may help Indian officials push for his early extradition as well.

• India has also asked Britain to hand over 57 wanted people, including Christian Michel, who is thought to be the broker in the Augusta Westland helicopter deal.

Umbilical link between the British and Pakistani Deep State

• This heritage of the British Raj in the subcontinent, which has been gone for a long time, lets Britain box in a heavier weight class with the help of Pakistan on the imperial follies of Jammu and Kashmir.

• The fact that there are a lot of Muslims from the subcontinent living in the UK, especially from places like Mirpur in Pakistan-controlled Kashmir, adds to the confusion that comes with vote-bank politics.

Non-Acceptance of White Britain

• White people in Britain, especially in the media, don’t like how India is becoming a world power.

Under its current Prime Minister, India has passed Britain as the world’s fifth biggest economy by GDP, and it’s going up.

A modern, confident Indian is the same as a British colonial Indian in terms of skin colour and the imperial heritage of the British Empire.

Influence of China

• Even though the UK and India have similar goals, their views on China’s role in the Indian Ocean have sometimes been different.

India is worried about China’s growing influence in the region, including its investments in ports through the Belt and Road infrastructure initiative (BRI). In comparison, the UK has been very involved with Belt and Road. This could make people in India think that the UK cares more about its ties with China than with India.

Colonial Prism: • The Indian political and executive classes have a lot of anti-colonial anger towards Britain that is always just below the surface.

• Bitter memories of the Partition and the idea that Britain favours Pakistan have made it hard for India and the UK to work together for a long time.

Steps taken to deal with the problems

• “Frequent Registered Traveller Scheme” for Indian business travellers to Britain. Under the plan, Indian citizens who often visit the U.K. and help both countries grow will have a “significantly easier” time getting in. They will have to fill out fewer forms, have easier access to EU-EEA visa controls, and move through airports more quickly.

• Infrastructure: Both countries revealed three UK-India city partnerships with Indore, Pune, and Amaravati to help India reach its ambitious goals for urban development by giving technical help, sharing knowledge, and working with businesses.

• Cleaning up rivers: Both countries have started a new relationship to help keep the Thames and Ganga rivers clean. This partnership will include a joint research and innovation project to help manage water resources in the Ganga basin in a sustainable way, as well as an exchange of policy experts in 2016, which will be backed by the UK Water Partnership.

Conclusion

• Britain has always said that it wants India to be a permanent part of the UNSC, which shows how close they are.

• India and the UK have become important partners in the world today. Their increased cooperation and collaboration in areas like defence, joint military exercises, counter-terrorism intelligence and strategies, space, education, trade and commerce, science and technology, cultural exchanges, etc. can help boost and deepen the ties into a real friendship that will ultimately benefit the people of the two countries.

• India needs to see that the different parts of the relationship don’t work well together. Long statements and goals that can’t be reached are not the answer. The most important thing should be to find common ground on problems that are bothering India. There have been many starts to this relationship. We have to give in to diplomacy just to stay in the game. Both Britain (after leaving the EU) and India (which faces a threat from China) need partners. India is having trouble because of the virus, so Britain has a head start. India and the UK have a lot in common in terms of culture, history, and language. Because of this, they need to build on these things to strengthen their relationship.