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UK Trade Deal With India Hit A Snag

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(Credit: Pool / Pool) Great Britain's trade deal with India is on a snag as Prime Minister Theresa May travels to India.UK Trade Deal With India Hit A Snag
November 8
6:00 AM 2016

Prime Minister Theresa May of Britain traveling to India to prepare the ground for what could be the country's first trade deal after it leaves the European Union, and show that Britain can thrive outside the bloc.

However, May had barely hit the ground when her aspiration to forge closer ties with one of the world's fastest-growing economies began to falter over immigration, the same thorny and emotive issue that helped propel Britain's decision to leave the European Union.

May's three-day visit, which began on Sunday, had been billed as a first test of Britain's ability to forge new and mutually advantageous trade deals with countries around the world, a way to demonstrate its ability to prosper outside the European single market. But while India is notoriously difficult to please in trade matters, the rocky reception was not an ideal way to start her first trip to India as prime minister.

Specifically, India is complaining about student visas, including a requirement that foreign students from outside the European Union must find a job four months after they finish their studies or face deportation.

Speaking at a technology conference on Monday in New Delhi, India's capital, Prime Minister Narendra Modi warned that education and mobility across borders for young Indians would help define India's relationship with Britain.

Indian business leaders have also called on Britain to slash the cost of a two-year visa to Britain from about $409 to $108, which is the rate that applies to Chinese citizens.

Under pressure,May at home to reduce immigration, has resisted calls to liberalize the visa system. The policy has had a chilling effect with student visas issued to Indians falling to 11,864 in 2015, from 68,238 in 2010, according to official figures.

In a move aimed at reducing immigration, the British government last week also introduced visa restrictions that would raise the salary threshold for foreign companies that want to transfer workers to Britain. The restriction has alarmed executives at Indian information technology companies, who say workers need to be able to spend months in Britain when working on projects.

During the referendum campaign on whether to leave the European Union, proponents of exiting the bloc argued that Britain could offset its dependence on Europe by forging new trade deals with nations of the Commonwealth such as India, with which Britain has longstanding economic and cultural links.

But supporters of exiting the union, a move known as Brexit, made emotional appeals to limit immigration a central part of their campaign. That has circumscribed Mrs. May's room for maneuver as she seeks to court countries like India that regard easing the mobility of their citizens as a necessary condition for attaining access to their expanding markets.

In what some interpreted as another snub, Mrs. May said she had been unable to arrange a meeting with senior executives at Tata Steel Ltd. during her visit. In March, the company said it was selling its steel operations in Britain amid losses due to fierce competition from China and weak demand.

Allie Renison, the leader of trade policy at the Institute of Directors, a business federation, said Mrs. May needed to understand that labor mobility and visas were essential for a service-based economy like Britain's.

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