LONDON — Rishi Sunak arrives in New Delhi for the G20 leaders’ summit Friday hoping to finalize a slimmed-down trade deal with India for signoff next month.
A free-trade agreement between the U.K. and India — one of the most coveted prizes of Brexit — will not be done and dusted this weekend, but both sides are hopeful a deal can be reached before the end of the year.
Such an outcome hinges in part on face-to-face talks between Sunak and Indian Prime Minister Narendra Modi, scheduled for Saturday in New Delhi.
No. 10 Downing Street is keen to make much of Sunak’s trip, with his spokesperson telling reporters this week: “As the first British prime minister of Indian descent, his visit will be an historic moment.”
Sunak now faces “a political decision” on whether to press ahead with a slimmed-down trade deal, one senior business representative told POLITICO, as Modi works to “bounce” him into a rapid agreement ahead of next year’s Indian election.
“Modi is less interested in the deal itself, and more about the geopolitical message that it sends about India’s place in the world,” said the same business figure. India’s leader is heading into an election year in early 2024 with a huge 36-point lead in the polls.
“Our assessment is [Indian officials] are trying to bounce the U.K. into agreeing something while there is … detail that hasn’t been worked through yet,” another senior business representative said.
From Sunak’s perspective too, a rapid deal could be politically expedient. The British PM faces his own general election next year, and unlike Modi is trailing badly in the polls.
A further round of talks have been scheduled for late September. Tentative arrangements have been made for Sunak to return to India next month to sign off a final deal.
“Sunak needs a win,” said a business consultant working on trade, explaining that while the deal on the table is “not a transformative win, it’s something and it buffers [his] international credentials.”
The two sides are looking at reaching a core deal focused on tariff reductions and some services access, while negotiations on complex issues like data flows and social security payments by short-stay visa holders are spun out over a longer timeline.
Historic trade deal looms
Trade talks with India were launched back in January 2022, with then-PM Boris Johnson promising a deal by the Indian festival of Diwali that same October. By the fall of 2022, however, Johnson had been ousted as leader and the deadline was abandoned.
But this week Modi’s officials told local media in India that a deal with Britain is now “essentially ready for signing, with both governments prepared on most subjects.”
Sealing the deal would make the U.K. the first European country to sign a free-trade agreement with India, a rapidly-growing market of 1.4 billion people.
Proponents say a deal would be a landmark moment in the post-Brexit era, strengthening Britain’s ties with a key rising power and offering economic benefits far eclipsing the trade agreements already signed with Australia, New Zealand and trans-Pacific nations.
Critics, however, say the total gains will still be marginal.
Trade between the U.K. and India is currently worth £36 billion. The U.K. government’s own assessments suggest tariff reductions alone could boost Britain’s GDP by 0.05 percent by 2035, while a more comprehensive deal could see it grow by 0.22 percent over the same period.
Ahead of his departure to New Delhi, Sunak’s spokesperson said the British PM was “committed to concluding an FTA with India which delivers for the British people, and this focus on delivery is a thread that will run through all of his engagements at the G20.”
But amid concern among Conservative MPs that more visas for Indian workers will form part of the package, the spokesperson added that there were “no plans to change our immigration policy to achieve an FTA.”
Talking Ukraine at the G20
Trade will only be one of the subjects up for discussion when Sunak meets Modi on Saturday — with India’s equivocation over the war in Ukraine also high on the British PM’s agenda.
The U.K. and other Western powers want to use the meetings to further isolate Russia over the war in Ukraine.
For the second year in a row, Russian President Vladimir Putin will skip the G20 summit, and is sending Foreign Minister Sergey Lavrov in his stead.
In a statement issued ahead of his trip, Sunak noted that Putin was “once again … failing to show his face” at the summit, leaving other G20 countries to “pick up the pieces of Putin’s destruction.”
The U.K. announced Thursday that it planned to host an international food security summit in November focused on alleviating the impact of the disruption to Ukrainian grain exports. Russia is blockading the country’s traditional Black Sea export routes.
Ahead of his trip, Sunak spoke on the phone to Ukrainian President Volodymyr Zelenskyy. A Downing Street spokesperson said the pair had “committed to galvanise work with G20 countries on circumventing Russia’s blockade and ensuring vulnerable countries can access vital grain shipments.”
Turkish President Recep Tayyip Erdoğan, who is due to attend the G20, is acting as an intermediary between Western powers and Russia on this and other issues.