(6 days, 19 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Business and Trade (Chris Bryant)
I beg to move,
That this House has considered the UK-India Free Trade Agreement.
I will start by saying why this deal is so important. That may seem obvious, I suppose. We did £47.2 billion-worth of trade with India last year. That was up 15% year on year, and India is now our 10th-largest trading partner, but it is the future potential that stands out. India has the highest growth rate in the G20. It is likely to become the third-largest economy in the world by 2029. By 2050, India will be home to more than a quarter of a billion high-income consumers. Demand for imports is due to grow as well, reaching £2.8 trillion by 2050. Assuming global foreign direct investment into India continues on its recent trajectory, it could grow to £1 trillion by 2033.
Despite all that, India’s markets have been behind some of the highest barriers in the world. It has some of the highest tariff rates in the G20, with gin and whisky at 150%, cars at 110% and cosmetics at 22%. Soft drinks, lamb, fish, chocolate and biscuits—I know that is an odd combination—are at 33%. In 2024, India was ranked as the eighth most restrictive services market by the OECD. That inevitably either prices many UK products out of the market or makes them a premium product beyond the reach of many in India.
Some 42% of UK businesses surveyed by Grant Thornton in 2024 said that they would want to build a presence in India, and 72% said that a free trade agreement would encourage them to explore the Indian market. The agreement that this Government secured was a momentous achievement. Others had been trying to get a deal like it for years and failed, but this Prime Minister, along with the then Secretary of State for Business and Trade, my right hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), and my predecessor, my right hon. Friend the Member for Lothian East (Mr Alexander)—I pay tribute to them—brought home the goods.
Chris Bryant
Oh dear. I will give way, but I think I know what my hon. Friend is going to say.
Gareth Snell
The UK is the single largest importer of Indian ceramics. The trade deal removes some of the tariffs that we apply to Indian imports. The removal of those tariffs, along with industrial energy pricing in India, means that those imports become incredibly competitive in comparison to our domestic market. In some cases, those imports are well below our own market production point. Bricks are also affected. We are the single largest importer of Indian bricks, yet our own brick kilns stand at two-thirds capacity. Can the Minister set out the protections in this trade deal to ensure that while we get the new markets for our exports, we do not undercut our domestic market with cheaper imports?
Chris Bryant
I thought my hon. Friend might be about to talk about ceramics. He regularly speaks up—privately to me and publicly in the House and elsewhere—on behalf of his constituents, and he is right to do so. As he knows, I visited some of the businesses in his constituency, and I am keen to ensure that we do everything in our power within the Department to support, protect and enhance the British ceramics industry, which is an important part of our work. I just say to my hon. Friend that the overall impact of this agreement on the ceramics industry will be limited, because 543 out of 577 lines—steel lines, for instance—were already at 0%. The remaining 34, which we brought to 0% as part of the deal, all currently have tariffs of just 2% or 3%, and India is not a prominent source of imports for those sectors.
I accept that there are broad issues for the ceramics industry, and I have seen everything that Mr Flello, a former denizen of this place, has produced. I do not think that this agreement is the problem. There are other issues that we need to address, not least the issues that my hon. Friend raises in relation to energy costs, which are very specific to the ceramics industry.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
The evidence that we took in the Business and Trade Committee did raise concerns about the impact of the deal on both the brick industry and the ceramics industry in the UK. The Minister knows that the Trade Remedies Authority is not really equipped with the tools that it needs to defend us in this new world; nor has the Competition and Markets Authority yet seen fit to finalise its foreign subsidy control regime, despite two years of consultation. Will the Minister at least assure the House that he will keep a very close eye on this matter, and will not hesitate to bring forward protections or trade remedies if the need arises?
Chris Bryant
Yes, of course. I read the report from my right hon. Friend’s Committee over the weekend, and it is a very fine report; indeed, some of what I have already said was lifted directly from it. Broadly speaking, I have the impression that the House might be content to proceed with the agreement, and the Committee was certainly content to proceed with it. As my right hon. Friend will of course know, I guaranteed to him that we would have a debate during the Constitutional Reform and Governance Act 2010 period, and we are now having a debate in the House during that CRaG period.
My right hon. Friend made a good point about trade remedies. In a whole series of sectors, we need to keep our review alert to that. He may wish to make some points later about labour in brick industry that are made in his report, but let me point out again that nearly 90% of ceramics imports from India already come into the UK tariff-free, so I am not sure that the agreement will lead to the particular problem that some in the sector expect.
The agreement goes well beyond India’s precedent in opening the door for UK businesses. As the Select Committee said in its report,
“The UK-India Comprehensive Economic and Trade Agreement (CETA) is the UK’s most economically significant bilateral free trade agreement since leaving the European Union.”
It boosts UK GDP by £4.8 billion, which is 0.13% of GDP. It boosts wages by £2.2 billion, and it boosts bilateral trade by £25.5 billion every year in the long run, by 2040. India will drop tariffs on 90% of lines, covering 92% of current UK exports, giving the UK tariff savings of £400 million a year immediately on entry into force, rising to £900 million after 10 years, even if there is no increase in trade. India’s average tariff will fall from 15% to 3%.
Jim Shannon (Strangford) (DUP)
I thank the Minister very much for his enthusiasm and energy in doing this job. I think that we welcome the tariffs.
The agreement was projected to give Northern Ireland’s economy a boost of some £50 million. Three distilleries in my constituency— Echlinville, Hinch and Rademon—will take advantage of the reduction in the whisky tariff. The opening of markets for manufacturing and engineering has also been referred to. Let me say with great respect, however, that six months after the agreement, Northern Ireland has not yet seen much happen. I know that the Minister is keen to make it happen, but may I ask him, please, when it will happen?
Chris Bryant
I believe that the hon. Gentleman is a is a teetotaller. Is that right?
Chris Bryant
Sometimes! Perhaps a tee-slightly-er or a tee-occasionally-er, but not total. [Interruption.] Yes, only in the early morning. Well, I got that completely wrong.
Anyway, I think all Members will want to celebrate the fact that we are managing to get the whisky tariff down from 150% to 75%, and then down to 40%. That will be transformational. Incidentally, this is not just about whisky itself; the other day I was with one of the founding members of Fever-Tree, who pointed out that it is also about soft drinks, including the soft drinks that go with the whisky, ginger ale being a classic instance. If we can get Fever-Tree ginger ale out to India at the same time, or for that matter—who knows?—perhaps even Indian tonic water, that will be a significant benefit for us.
The hon. Gentleman made a perfectly legitimate point about timing. Plenty of companies are asking me, “When is it all going to start?” We have to go through a ratification process, and what we are doing now is part of that. India has its own process, which is largely in the hands of Mr Modi directly, but I am very confident that that can happen fairly swiftly, and I hope very much that in the next few weeks and months we will be able to declare a date for entry into force.
There is always a slight moment between concluding the negotiations, the signature, the ratification and then entry into force. We cannot ever be precise about the date of entry into force until ratification has proceeded, but we are working as fast as we can. There is one other element that we always said we wanted to happen simultaneously: the double contributions agreement, which His Majesty’s Revenue and Customs is negotiating with India. As soon as all that is completed, I hope we will be able to get to entry into force. I will come on to the implementation.
I should just say that I slightly confused all my tariff lines earlier between steel and ceramics. We will tidy that up a little later, if that is all right with you, Madam Deputy Speaker.
Every region and nation will benefit from the agreement, including a £210 million boost for the north-west, driven by aerospace and automotive wins; a £190 million boost for Scotland, supported by cuts to whisky and satellite tariffs, and by financial services access; and a £190 million boost for the east of England, generated through tariff cuts and improved rules for medical devices and clean energy products. There are some big winners, and I have already talked about whisky. We estimate that whisky exports will increase by £230 million—an 88% increase. The tariffs on autos will fall from over 100% to 10% under quota, which will phase from combustion engines to electric vehicles. Auto parts and car engine exports are expected to increase by £189 million—a 148% increase.
The tariffs on cosmetics will fall from 20% to as low as 0%, which will boost exports by £400 million—a 364% increase. I talked to Charlotte Tilbury about this the other day, and she was absolutely—[Interruption.] The Whip is very keen on Charlotte Tilbury, so I will pass on her request for further information. I think you are putting in a request as well, Madam Deputy Speaker. The important point is that we need to make sure that businesses know that there is this new opportunity out there in India, and we need to maximise the exploitation of the new tariffs.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
According to the Government’s figures, this trade deal will add only 0.14% to our national GDP. What are we giving up in return for that measly amount of benefit, and is it really worth sacrificing our commitment to human rights to sign these kinds of trade deals with countries and leaders who are reported to have breached human rights?
Chris Bryant
I will talk about human rights in a moment, but if the hon. Gentleman can come up with a better way of finding a 0.14% increase in GDP, I would be very happy to hear it. Frankly, the idea that we would just turn our backs on one of the biggest economies and largest democracies in the world, and not say yes to a trade deal, is for the birds.
There is a whole series of human rights issues that we always want to raise with our trade partners, and we do so. When we are negotiating a free trade agreement, they are not necessarily a central part of it, but in this deal, for the first time ever, we have clauses on a whole range of human rights-related issues. The hon. Gentleman could easily point out that these are not legally enforceable, but they are an opportunity—both at the first review, which will come at entry into force, and on future occasions, which are laid out in the free trade agreement—for us to talk through these issues. Human rights issues are primarily the responsibility of the Foreign, Commonwealth and Development Office, through which we raise issues relating to Kashmir, particular individuals, labour laws and so on.
I am aware that non-tariff barriers are being removed through improved customs processes, reductions in technical barriers to trade, increased facilitation of digital trade, supportive intellectual property commitments and greater collaboration on new technologies. This will all help to make trade quicker, cheaper and easier.
On services, which are obviously very important for us as a services superpower, market access is locked in, including ensuring that UK companies are treated on an equal footing with Indian companies. The deal includes India’s first ever financial services and telecoms chapters. The free trade agreement is expected to boost services exports by £1.6 billion. On procurement, which again is very important for the UK, brand-new access to India’s federal procurement market will be locked in, guaranteeing access to approximately 40,000 tenders per year, worth at least £38 billion per annum, and exclusive treatment for UK companies. For the first time, UK companies will have access to India’s procurement portal.
I hope the colleagues will agree that CETA is a good deal for the UK, but I want to respond to a couple of points made in the Business and Trade Committee’s report. First, the deal will only be of any use if it is actually used by UK companies. We know that it will not always be plain sailing, thanks to varying rules in different states and provinces—that point was made in evidence to the Committee—the staging of tariff liberalisation will need explaining, and non-tariff barriers can be just as important as tariff barriers.
As the first Minister for trade policy and for exports, I am keen to ensure that businesses have all the support they need to exploit this deal. That is why we are protecting the Department for Business and Trade team in India, and why we have already engaged with more than 5,000 UK businesses on how to exploit CETA, through guidance, events and roadshows. As I said earlier, this is not just about Scotch whisky; it is also about Fever-Tree ginger ale to go with it and its Indian tonic water. We have also provided specific support to the UK cosmetics industry to exploit the cut in cosmetics tariffs, which will benefit companies such as Charlotte Tilbury and Dr.PAWPAW. As the Committee suggests, once we get to entry into force, we will monitor the operation of CETA’s provisions, including through the regular reviews built into the agreement.
This is also not the full stop in our developing relationship with India. Vision 2035, agreed with India alongside the free trade agreement, sets out a shared framework for deeper co-operation across technology, defence, climate and strategic exports, reinforcing the long-term direction of the bilateral partnership. We will also try to resolve other market access issues not solved in the free trade agreement—for example, legal services, recognition of qualifications and other specific state-level barriers. The UK is open to continuing negotiations for a bilateral investment treaty, as long as it works for UK businesses.
As I have said, this is a trade agreement, but I want to assure Members that it also promotes British values. We have secured India’s first ever chapters on anti-corruption, consumer protections, labour rights, the environment, gender and development, and the agreement includes the strongest environmental commitments that India has ever made in an FTA. Our key commitments and red lines have been maintained throughout, including protecting the NHS; ensuring that our immigration system is not affected; carving out defence and protecting our export controls; excluding sensitive agricultural sectors, including pork, chicken, eggs and milled rice; maintaining our food standards and animal welfare levels; and keeping the carbon border adjustment mechanism out of the deal.
Plagiarism is the sincerest form of flattery, so I am glad that the European Union has now reached political agreement on its own FTA with India, for which it seems the UK deal was used as a baseline, but the UK retains first mover advantage. I am hopeful that we will get to entry into force before the end of the summer, so that UK businesses can start exploiting the reduced tariffs this year, while the EU will still take some time to achieve ratification, and only the UK has secured access to India’s £38 billion federal procurement market.
Let me make one final point. The UK is a trading nation: we rely on free and fair trade, and we believe that global trade needs a set of rules. The World Trade Organisation will meet in Cameroon in the next few weeks. We believe that it needs upholding and reforming so that it can tackle the challenges of today, including electronic commerce, unfair subsidies, dumping and secure supply chains with agility and dependability. However, we also believe that trade agreements such as these, along with our membership of the comprehensive and progressive agreement for trans-Pacific partnership, help to secure our prosperity and enhance our international standing. We are still pursuing new or enhanced deals with the Gulf Co-operation Council, Türkiye, Switzerland and Greenland, and we are completing the text of our economic prosperity deal with the United States of America and our deal with the European Union. I commend this deal to the House, and I congratulate the former Ministers who secured it.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Andrew Griffith (Arundel and South Downs) (Con)
I am delighted to see not just the excellent Minister for Trade, but the Secretary of State. [Interruption.] I did; just bank the win. I read that the Secretary of State is being earmarked as a caretaker Prime Minister, so we are pleased that he has the time to spend with us—I think we have 10 minutes before Labour colleagues have to run upstairs.
Richard Cobden said:
“I believe that Free Trade will do more to civilise the world than all the treaties of peace that have ever been signed.”
He was the former Member of Parliament for Stockport, but he was a resident in my own West Sussex constituency, near Midhurst. His advocacy of free trade, including in this House, was always about its benefits for ordinary people: cheaper food, higher wages and fewer incentives for people to wage destructive wars that had a huge impact on ordinary people.
We Conservatives agree. Those on the Conservative Benches will always be the party of free trade, where it benefits our country. That is why it was a Conservative Government who signed new landmark trade agreements with the EU, Japan, Australia and New Zealand, and negotiated the entry of the UK to the comprehensive and progressive agreement for trans-Pacific partnership. It is why it was the Conservative Government who laid the foundations for this free trade agreement with India. And let us be absolutely clear: this agreement is a tangible benefit of the decision the British people made in 2016 to leave the political institution of Europe; the fruit of the independent trade policy we regained, allowing the United Kingdom to negotiate once again as a sovereign state, just like Canada, Australia and Switzerland —Britain first, not Britain hoping against experience that its interests would float to the top of a soup of 27 other conflicting flavours.
Since July 2024, the Indian economy has grown by 11%. For context, the European Union has grown by 1.9% in the same period. Under this Government, the British economy has grown by just 1.6%. Exports matter, so this deal has the potential to be a key part of a growth plan for our economy. However, as any business leader will tell us, the devil is not just in the detail of such deals, but in what is not in them. I welcome the excellent report by the Business and Trade Committee, which is very thorough and an important part of the scrutiny process of this House.
We are a nation for which services represent nearly half of our global exports. I am afraid it appears that the Government have accepted a deal that is disappointingly thin on the sectors where Britain leads the world. The inclusion of services in this deal was the No. 1 priority of the previous Government’s negotiations. Instead, this deal settles for locking in existing levels of liberalisation—all good—rather than breaking new ground on services. There is an absence of provisions for mobility to allow our service industries to really integrate in India, restricting our consultants, engineers and architects from practising on the ground.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Will my hon. Friend reflect on the view, which I hear a good deal in a constituency, which contains very many entrepreneurs both of Indian heritage and with connections to business in India, that this deal shows a Government who are not listening to the voice of business that has that level of experience, because they are missing out, as he is describing, on so many of the opportunities that those existing business links contain.
Andrew Griffith
Well, I was going to be generous to the Government and say something slightly positive. My hon. Friend is absolutely right that Governments of all flavours could do an infinitely better job of listening to businesses. They are the people at the frontline in the real world. His constituents have very deep links to the economy of India and it represents a real opportunity. We support the deal, but the only tone today is one of slight regret about the missed opportunities. Of course, it is easy for a Government to get a deal if they take the deal being offered, rather than negotiating and seeking to improve that deal. Therein is some of the difference between the approach of our Government and—[Interruption.] Well, we did not get it because we were not willing to take the deal that was on the table. We were holding out and negotiating for a better deal.
Let me give the Minister an example of that—a quite surprising example, in many ways—which is the complete omission of a legal services sector deal from this agreement. The Law Society called that
“a missed opportunity for a significant breakthrough”.
The chair of the Bar Council said it was
“a once-in-a-lifetime opportunity”
missed. How ironic that a Government of lawyers, led by lawyers and stuffed full of lawyers, could not get even that aspect of the agreement across the line. The deal places a 36-month target—I hope it is a target, not an aspiration or ambition—for the conclusion of a mutual recognition of a professional qualifications agreement. That would be a great opportunity. Our services sector would welcome that, but I hope the Minister will agree with me that not to achieve that now would be to snatch defeat from the jaws of victory. It would be a humiliation for this Government and I hope he will address, when he winds-up, the precise plans to secure that agreement.
In a similar vein, the bilateral investment treaty that was planned to be agreed at the same time—it was in the original objectives for our deal—has also not been delivered. This is the deal that was offered, rather than the deal that could have been negotiated and improved. That leaves British investors exposed to sudden policy changes, unfair treatment and expropriation. I could, of course, be talking about the policies of this Government, but in this case I am talking about the Indian Government and the jeopardy for some significant British investors. Again, this is another missed opportunity—a deal that we support but that could have been better. I understand that the chief negotiator on the deal has confirmed that, sadly, there are no plans to return to the table to get an investment treaty across the line, but I would be very happy to stand corrected on that. Perhaps that point could be addressed in the Minister’s winding-up speech.
As we heard from the Minister, on day one the deal will grant Indian exporters of such wonders as textiles, gems and engineering goods immediate duty-free access to the British market. This is a welcome deflationary measure. It will come as good news for households as the price of goods in their weekly shops fall. Leather shoes, clothes, home furnishings and more will be cheaper under this deal. However, it is disappointing that this welcome reduction in tariffs is very far from symmetrical. Indian exporters benefit immediately, while British exporters sit in the waiting room. Scottish whisky producers, whom we have heard about, manufacturers of electric vehicles, the medical consumables industry and chemical producers will have to wait for between five and 10 years before tariffs are fully reduced.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
The hon. Gentleman briefly mentions whisky. The deal is broadly welcomed by the Scottish whisky sector and I have welcomed it myself as an MP for a constituency with 49 distilleries—I am trying to visit them all. He talks about asymmetry in the deal, but is there not asymmetry in Labour Government policy, between the export deal, where they are trying to get the best possible deal for whisky, while whisky is still paying the highest levels of duty for alcohol in the UK? That is putting undue pressure on a sector that is already under pressure.
Andrew Griffith
The hon. Gentleman makes an important point. I do not want to simply agree with him for the sake of it: it is not easy for Chancellors of whatever flavour to balance the books, but where we have wonderful industries such as all our drinks and spirits industries, including, if I may say so, our English wine industry, the Government must do everything they can to promote them—
Andrew Griffith
And Welsh, and from other parts of this wonderful kingdom.
This Government, as the previous Government, have by and large got the importance of the wonderful Scottish whisky industry, but it is important to do anything that can be done to help. Of course, the way that one reduces taxes over time is by making tough decisions on Government spending, which would be one of the key things the Conservatives would do in order to be able to lower those taxes.
The hon. Member for Stoke-on-Trent Central (Gareth Snell), who is no longer in his place, made an important point about the protection of ceramics and related industries, such as our brick and energy-intensive chemicals industries, which are all important. A trade deal, however wonderful it may or may not be, will do nothing to help the ruinously high energy costs faced by the ceramics, brick and chemicals industries, along with so many others. This debate is not about that issue and it is not the responsibility of the Minister, but it is nevertheless an important factor; if we are going to lower barriers and frictions so that we can boost trade, increase the prosperity of our citizens and grow our economy, that absolutely must involve the full stack, including energy and what one does about employment law and regulation.
Sir Julian Lewis (New Forest East) (Con)
I hope I am not stretching the boundaries of the debate excessively, but I would be interested to know whether the agreement has any implications for defence exports to India and, if it does, what safeguards would be in place, given the unhealthily close relationship between India and Russia.
Andrew Griffith
The document produced by the Select Committee lays out the impact for defence, modest as I believe it is. I will leave it to those on the Government Front Bench to answer my right hon. Friend’s important question about security—
Chris Bryant
I wonder if I could talk through the hon. Member for Arundel and South Downs (Andrew Griffith) to the right hon. Member for New Forest East (Sir Julian Lewis): our export control system for any exports from the UK into any other country in the world bears in mind diversion from one country to another. That is a very important part of what we look at. The FTA does not affect that process at all.
Andrew Griffith
I hope that my right hon. Friend is reassured to a degree by the Minister’s response. I will move on now—you will be pleased to know, Madam Deputy Speaker, that my speech is not as comprehensive as the work of the Select Committee.
I would be grateful if the Government could clarify a few points about the position on food and agricultural products. There are protections for sugar, chicken, eggs and pork, and that has been welcomed by producers. However, there are concerns from the British dairy industry about opening the market, which describes the deal as a one-way street: dairy is excluded from UK exports to India, yet tariffs on Indian dairy coming into the UK are removed.
Chris Bryant
I will try to keep up as we are going along, if that is okay. On dairy, I understand the point the hon. Gentleman is making; it has been made to me before and was also made in Committee. However, I am not aware of any Indian cheese company that has been able to export into the UK, as it would still need a licence. We were very keen to secure arrangements so that we were not abandoning any of our food standards, which obviously have to be met before any export can come here.
Andrew Griffith
I will try to leave the Minister with a short list of questions, rather than going through each and every one as we go.
Notwithstanding what the Minister has just said—perhaps we can revert to this later—there are also concerns about the Government’s hypocrisy in respect of pesticides and animal welfare, particularly with regard to crustaceans. I do not know whether the Minister has quite the same degree of expertise in crustacean welfare and in particular prawn eyestalk ablation, which sounds more trivial here than it would to the prawn whose eyestalks are being ablated. Those concerns are particularly relevant because despite the Government publishing and vaunting their virtue in terms of animal welfare, these poor blinded prawns seem to be victims under this deal. [Interruption.] I would be happy to give way to the Minister on prawn eyestalk ablation, which is an important point; perhaps, on winding up, he could make a more general point on trade deals and how the Government will protect our animal welfare and food safety standards.
Andrew Griffith
I am in no way qualified to answer that. However, it is the Government’s position about crustacean welfare, and they should speak to it. Just before Christmas, they published a significant proposal to change the law on that. As ever in trade, this is not a point about the underlying fundamentals, on which the Minister will be advised by Government scientists and others—I did part of his job as Minister for Exports; it is a point about the symmetry and balance of the issue.
David Simmonds
My hon. Friend will recall that during the debates about post-Brexit trade agreements, the highest possible standards of animal welfare were raised frequently across the House on a cross-party basis. The matter my hon. Friend is talking about involves swapping prawns and other types of seafood caught in British waters to the highest possible standards with creatures reared using a method that involves pulling off their eyeballs while they are alive in order for them to lay more eggs so that more prawns can be produced more cheaply. I am sure we would all agree that is cruel and would not meet the expectations set out across the House. Does my hon. Friend agree that it is a powerful point that illustrates the asymmetry in this deal, which he is quite rightly seeking to criticise?
Andrew Griffith
My hon. Friend puts the point in a better and more informed way than me. It is important, and it is for the Government to set out very clearly how they propose to maintain or create a level playing field on these matters so that producers operating here to British standards are not disadvantaged, while we all get the benefits of trade and prosperity that I spoke of.
Chris Bryant
We are all joking about it, but this is a serious matter. The centre of the point is that whatever the tariffs may do, companies can only sell products in the UK that meet our food standards—precisely the point made by the hon. Member for Ruislip, Northwood and Pinner (David Simmonds). In order to ensure that is true, companies have to have a licence to sell in the UK. In addition, all Indian aquaculture products are currently subject to intensified controls with 50% consignment checks at the border. This is one of the many areas where we need to ensure that we protect our producers in this country, who are abiding by very high standards. I could apply that to all the different agriculture and foods that we are talking about, as well as to aquaculture.
Andrew Griffith
I thank the Minister for that intervention; I drew some comfort from it, but we will have to see the detail of the exact crustacean protections we end up with.
Finally, there is one glaring area that—even beyond the missing benefits to our important services industry—was a point of difference in the negotiations that we conducted and a reason why, when we were in government, we did not consummate that deal and why the negotiations remained outstanding. The Leader of the Opposition has been very clear about this: when she was leading the negotiations, she refused to sign this deal because of the double contributions convention. The Minister will know precisely what I mean by that.
We still have not seen the detail of that convention, and every Member of the House should be concerned. This is a very limited part of the process of scrutiny of trade deals—the rights of Parliament are perhaps not fully discharged just by the CRaG process. However, we have not even seen what the Minister referred to earlier as the HMRC agreement on this. What it means in substance—I will choose my words very precisely—is that Indian workers who come here to work will not pay a penny in British national insurance contributions, and neither will their employers.
The Government decided that they would open this deal—this two-tier tax system for India—at precisely the same time as hiking their jobs tax on every single British worker. I am happy to be rebutted or corrected, but by my calculations, under this agreement it could be up to £10,000 a year cheaper to hire a software developer on an average British salary from India than to hire someone from Britain for the same role, as employers will not be liable for those national insurance contributions. These are big numbers, and this will mean a big disadvantage to hiring an identical British worker at a time when there are 9 million people of working age not in work and when unemployment is rising—in fact, it has risen every month under this Government.
Sir Ashley Fox (Bridgwater) (Con)
Does this not suggest that when a deal was presented to the then Conservative Secretary of State for Business and Trade, she declined to sign it because she judged it not in the British interest? It does rather seem as though this Government have rolled over on this key point, which will allow Indian firms to import Indian workers in preference to British ones.
Andrew Griffith
My hon. Friend makes exactly the right point. The former Secretary of State—the current Leader of the Opposition—has been very clear that that was a deal breaker. It was deal or no deal, and if that had been an absolute red line, we would not have signed this deal. It is not a virtue to take any deal that is offered. As I say, the Conservatives are in favour of trade, and we value our relationship with India, but we would not have crossed that red line.
Iqbal Mohamed
Does the right hon. Member agree that anybody who comes to our country and does not pay into the system through national insurance and taxes should not be allowed to benefit from services that taxpayers fund, like the NHS, education, GPs, dentists and so on? It is a two-tier system if we are treating our care workers and healthcare professionals who come here on official visas differently from imported labour.
Andrew Griffith
I am glad to hear agreement across the House on the desire not to have a two-tier system. We all understand the need to pay our taxes to support our public services, but it will not feel right if two people are sitting cheek by jowl, side by side in the same place of employment—a factory or other work environment—but are contributing at a very different rate to the Exchequer for the public services that we all support.
Andrew Griffith
Let me finish my point, and then there will be plenty of opportunity for interventions. I will not anticipate the Minister’s point, but there are other agreements such as this in place—I want to be full and clear about that.
There are social security agreements where contributions are both paid in and taken out. We have them with the European Union, for example. They are a long-standing feature, and they were under previous Governments. Again, to be very clear and open, we also have a limited number of agreements like this with some selected other countries, including the high-skilled economies of Japan, South Korea and Chile and, to some degree, Canada. But we do not have an agreement like this of any sort with a mostly English-speaking nation of 1.5 billion people, all of whom would potentially be better off availing themselves of this arbitrage—this two-tier system—under this deal.
Astonishingly, this part of the deal was left out of UK Government communications, so not only do we have two-tier substance in terms of the economics of the deal; we also have two-tier communications. The Indian Government boasted about this element as a significant and attractive feature of the deal, but there was not a single mention of it in the UK Government communications. That, in and of itself, should send alarm bells ringing about this two-tier tax deal.
Chris Bryant
I was not going to make the point that the hon. Member went on to make—that his Government signed up to lots of similar arrangements—but I was going to respond to the intervention from the hon. Member for Dewsbury and Batley (Iqbal Mohamed). It is important that we make it clear that under the double contributions convention, a detached Indian worker and their employer in the UK would need to pay into the Indian provident fund. On top of that, they will need to pay £3,105 in NHS surcharges, and up to £769 in visa fees. On top of that, the employer would pay an immigration skills charge of £3,000, and £525 to issue a certificate of sponsorship, so I do not think that the numbers add up in the way that the hon. Member for Dewsbury and Batley was suggesting.
Madam Deputy Speaker (Caroline Nokes)
Order. The shadow Secretary of State has already spoken for longer than the Minister, which must be something of a record. I appreciate that there have been a lot of interventions on the shadow Secretary of State from Government Front Benchers, but perhaps he can draw his remarks to a close. The Minister will have ample time to make his points in the wind-up.
Andrew Griffith
I shall take good heed of those comments, Madam Deputy Speaker.
We support having a sovereign trade policy, and this is an excellent example of where it could have advantages. We are talking about one of the largest economies on the planet, which is growing approximately five times faster than the European Union. However, the deal could have been better. We are passionate about supporting our investors, lawyers, engineers, scientists and the wonderful services industry. We believe that they can compete anywhere in the world, provided that the field is level and the rules are fair, but we did not need to get a “good enough” deal across the line. British businesses needed something with a really good kick in it to get this country growing. Instead of a vindaloo of a deal, the Prime Minister came back with a bag of soggy poppadoms.
Imran Hussain (Bradford East) (Lab)
As I begin my remarks in this important debate, I want to be absolutely clear that I do not oppose free trade deals. They have immense benefits, as was set out by the Minister. For once, or certainly on this very rare occasion, I accept some of the points made by the shadow Secretary of State, the hon. Member for Arundel and South Downs (Andrew Griffith), about missed opportunities. There has been one big missed opportunity in this deal: at what point do we sacrifice our obligation to protect human rights in favour of free trade? That is what I will focus on.
The free trade agreement before us raises many serious questions about our trade policy and human rights, but for many of my constituents in Bradford East, the debate is about not abstract trade policy, or distant diplomatic calculations, but an issue very dear to their heart: Kashmir, which continues to be occupied. I represent thousands of British Kashmiris with close family ties to Jammu and Kashmir. For them, the actions of the Indian state are not theoretical, but lived realities, felt through family separation, fear, arbitrary detention and the systematic erosion of basic freedoms. That is why the UK-India free trade agreement raises such serious and urgent concerns. It is a major agreement with over 30 chapters, as pointed out by the Minister, yet it contains no explicit enforceable human rights clause. It goes much further than tariffs; it is about standards, co-operation and the institutional machinery that will shape the relationship for years to come. The central question for many of my constituents is: how can we seek to deepen economic co-operation with India while remaining silent on the grave ongoing human rights violations in Kashmir and beyond?
Let me be clear at the outset: economic engagement can never come at the expense of human rights, and must never come at the expense of the Kashmiri people. For nearly 80 years, Kashmiris have endured persecution, repression and injustice. In recent years, the situation has dramatically worsened. Since the illegal revocation of articles 370 and 35A in 2019, Indian-occupied Kashmir has experienced prolonged restrictions on civil liberties, mass surveillance, arbitrary detention and repeated internet shutdowns. Political dissent has been criminalised. Journalists have been silenced, and human rights defenders have been targeted.
These are not isolated incidents; they form part of a deliberate and sustained policy to strip Kashmiris of their dignity, voice and agency. I hear about this from the wider community I represent. Their family members have been detained without charge, have their communications monitored, and have their basic freedoms denied. This is not an abstract foreign policy issue; it is a human rights crisis that reaches directly into our communities here in Britain.
Political prisoners remain behind bars without due process. Khurram Parvez, a globally respected human rights defender, has spent years imprisoned for documenting abuses. Yasin Malik has recently been convicted, following proceedings that have been widely condemned for lacking fairness and transparency. These cases symbolise a broader reality about the use of national security legislation to silence dissent, criminalise peaceful political activity and intimidate those who speak out. Despite that context, the UK-India free trade agreement contains no binding human rights safeguards, no accountability mechanisms and no credible system of monitoring. There is no dedicated human rights chapter, and under the agreement, no monitoring body would be required to monitor human rights risks, such as the risk of arbitrary detention and repression.
The Government present this agreement as a landmark deal, designed to deepen economic ties and open new markets, but trade agreements are not neutral instruments simply for economic gain; they reflect political choices and moral priorities. This agreement seeks to formalise and deepen economic co-operation with India, while deliberately excluding enforceable human rights provisions. What kind of message does that send? It sends the dangerous message that human rights violations can be overlooked in the pursuit of market access. It tells those responsible that there will be dialogue, but no consequences.
Engagement without conditions does not drive reform; it signals impunity. Independent organisations, including UN bodies and human rights non-governmental organisations, have documented widespread, systematic torture and ill treatment by Indian police and security forces, including custodial violence and abuse of pre-trial detention. India signed the UN convention against torture in 1997, yet by choice remains one of the few countries in the world never to have ratified it. The House will know that torture is absolutely prohibited under international law. That is not culturally relative and not negotiable, and it cannot be ignored while negotiating preferential trade access.
I also note that the agreement’s labour commitments are explicitly excluded from the dispute settlement mechanism, which means that they cannot be enforced in practice in the way that provisions in the core economic chapters can. If we are serious about a modern partnership, then workers’ rights and decent standards cannot be treated as optional add-ons. Warm words are welcome, but without clear accountability, they offer little reassurance to those at risk of exploitation, and they leave an imbalance between what the agreement compels and what it merely encourages.
Parliament’s duty to get the safeguards right is all the greater, given that UK-India trade is at around £43 billion, and given the deep ties across our communities. It is troubling that there are no monitoring triggers, safeguards or accountability mechanisms that speak to Kashmiri or minority protections. There are no graduated remedies for serious abuses—there is nothing short of tearing up the whole agreement—and there is no meaningful lever to use when violations occur. The agreement may have come before us, but what real influence does Parliament have, even in a debate like today’s? What ability do we have to add safeguards or human rights clauses?
Let me use the little influence that we have to ask the Minister some questions; I look forward to direct answers —he is normally very good at giving those. How can the Government justify advancing a trade agreement of this scale while excluding binding human rights protections, particularly in the light of the situation in Kashmir, which continues to worsen? What mechanisms are there, linked directly to this agreement, for monitoring and responding to credible reports of human rights violations? What assurances can be given to British Kashmiri communities that their concerns are not being sidelined in the name of economic convenience? Finally, the Minister will be aware that Indian-occupied Kashmir remains disputed territory. What safeguards are in place regarding any trade that occurs, as a result of this agreement, directly with an occupied territory, as recognised under international law? The agreement remains silent on that important point.
This agreement is not yet in force, and Parliament still has a responsibility. We must insist that trade policy strengthens justice, rather than undermines it. We must refuse to send the message that human rights, especially the rights of an oppressed people, are negotiable. For the Kashmiri community I represent, I cannot stay silent and see injustice continuing. I cannot accept a trade agreement that deepens economic ties while turning its back on human dignity and justice. The world has ignored Kashmir for far too long. Britain must no longer be part of that silence. We have a moral, legal and historical duty, and it is about time we honoured it.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Charlie Maynard (Witney) (LD)
I refer Members to my entry in the Register of Members’ Financial Interests regarding the business that I founded in 1996, BDA partners, in which I still hold a stake but have no role or responsibility.
Economically, this agreement offers some benefits. As per the Government’s impact assessment, and as the Minister stated, the UK’s gross domestic product is estimated to increase by 0.13% as a result of this FTA. That is equivalent to £4.8 billion. That is in the long run— 0.13% by 2040. Let us put that into context: the hit to our economy from Brexit is around 6% to 8% of GDP—in the region of £210 billion—so its impact is 44 times larger. That is now, compared with the 0.13% we get in 15 years’ time.
Sir Ashley Fox
The hon. Gentleman quotes a Brexit hit of 6% to 8% of GDP. Has he just invented that figure or has he got some evidence for it?
Charlie Maynard
The National Bureau of Economic Research, in the United States.
Charlie Maynard
I certainly like the States.
While we are making comparisons with Europe, I note that under the UK’s free trade agreement 92% of our exports to India will enter tariff-free. Under the EU’s deal, 96.6% of its exports can enter India tariff-free. Perhaps there is some logic, after all, to bigger trade blocs having more leverage. I wholeheartedly agree with the comments from the hon. Member for Arundel and South Downs (Andrew Griffith) about national insurance contributions. I am also deeply concerned about that, as is my party. I also take the Minister’s point about visa fees and everything else, but by the time we add all those together, I think that UK Inc—whether in my constituency of Witney or across the UK—will still be at a major disadvantage. This risks undermining British labour—
Charlie Maynard
I really hope I am wrong, but I don’t think I am.
Moving beyond the numbers, I highlight the concerns of civil society groups, which many Members have mentioned, about clauses in the agreement on labour, the environment and human rights being characterised by a pattern of aspirational language and a lack of enforceability, with the result that they are not subject to the dispute settlement mechanism—cute words but no teeth. The Liberal Democrats have long called for a set of minimum standards to benchmark future trade agreements, which would include human rights, conflict and oppression and environmental, labour and safety standards, where they can be negotiated, based on a UK trade and human rights policy and a trade and development policy.
I want to ask some question about India’s role in busting the trade sanctions that the UK has put on Russia. To recap: Russia invaded Ukraine in February 2022, and both the UK and the EU banned direct imports of Russian oil and petroleum products in December 2022. However, a loophole stayed open that allowed derivative products including petrochemicals imported from third countries into the UK to continue using Russian-origin crude oil and gas. In July 2025, the EU amended its sanctions legislation to target imports of petrochemicals from third countries that used Russian-origin oil. This has now taken effect in the EU. The EU has blocked this loophole. In October 2025, the UK announced a further sanctions package targeting specific third-country entities that supported Russian fossil fuels. That included India’s Nayara Energy, which is part-owned by Russia’s state oil company Rosneft.
On 2 December 2025, the Trade Minister told the Business and Trade Committee, of which I am a member,
“we want India to do less business with Russia because we want Russia’s machine to be debilitated. There are lots of things that I want to achieve in the world and not all of them can be achieved through FTAs.”
The Trade Minister and the trade team fully understood, therefore, that India was, and is, selling Russia-originated petchems into the UK. We had leverage when we were negotiating the FTA, but instead the UK decided to turn a blind eye to India’s sanction-busting, helping Russia’s war effort. This continues right now, with the UK importing jet fuel and other petrochemicals from India that are manufactured with Russian oil and gas. The refining loophole is still there because His Majesty’s Government have not yet legislated to ban imports of derivatives from Russian crude. The Government say that they expect a ban to be enforced in spring 2026, whenever that is.
Analysis by the Centre for Research on Energy and Clean Air shows that between the ban on direct imports coming into force in 2022 and the end of 2025, the UK has imported £4 billion-worth of jet fuel and other oil products made at refineries in India and Turkey, which run partially on Russian crude, and that every month the UK delays banning oil products made from Russian crude, it is effectively writing the Kremlin a cheque for around £44 million.
It gets worse. Four of the five largest oil refiners in India are majority-owned by the Indian Government, with Reliance being the fifth, so it is not just the Indian refiners that are helping Russia by selling us petchems; the state of India itself is right now selling jet fuel and other petrochemicals derived from Russian oil and gas into the UK. What have we done about it? We have signed a free trade agreement with India. To add insult to injury, the loophole to be closed, as far as I can tell, just covers oil derivatives, but petrochemicals are derived from natural gas, too. What is happening with those?
I have five questions for the Minister. First, what is his justification for signing an FTA with a country that is helping Russia to breach its sanctions? Secondly, was this issue discussed in the FTA negotiations? Thirdly, does the planned ban cover petrochemicals imported from India and other third countries derived from either oil or gas? Fourthly, please will the Minister tell us the specific date on which the ban will come into force, what steps will be required to effect it and what the timeline is for each of those steps? Finally, what are the reasons for the delay in implementing the ban? Why have the Government not already closed the loophole?
Douglas McAllister (West Dunbartonshire) (Lab)
I welcome the UK-India free trade agreement. It is truly historic and a groundbreaking deal for the UK, for Scotland and for my West Dunbartonshire constituency. As the Minister said, India is the fastest-growing country in the G20 and it is set to become the third-largest economy in the world by 2028. For this reason, it is crucial to secure a strong and mutual relationship with India. In the current geopolitical climate of uncertainty and instability, these relationships are more important than ever. This Government have delivered a favourable deal that brings hope and investment for the future. Through this deal, we are making significant progress towards achieving our growth mission.
For West Dunbartonshire, the impact of the new trade deal will be immediate and tangible. It will result in much-needed investment for West Dunbartonshire and its residents. The Scotch whisky industry supports thousands of jobs in my constituency, and this trade deal will hopefully result in many more. These businesses provide skilled, well-paid jobs and anchor our local economy. It is a vital industry to my constituency for workers, local economies and tourism, and it is one that we are very proud of.
My constituency is home to Chivas Brothers, the Auchentoshan distillery, the Loch Lomond Group and a number of smaller distilleries. The Chivas Kilmalid bottling site in Dumbarton employs more than 1,100 people on permanent contracts alone, and we are proud to be home to its state-of-the-art bottling site. Its recent multimillion-pound investment programme continues at pace. This deal gives the industry the added confidence to invest and, in doing so, gives the workforce added confidence and security in their future.
Scotch whisky distilleries are among the most visited tourist attractions in Scotland, drawing domestic and international visitors who support our hospitality sector. Long-term export growth will, of course, strengthen this. Scotch whisky has faced sky-high import tariffs for decades—as high as 150%—and under this new agreement, those costly tariffs will be cut in half and further reduced to 40% within 10 years. Furthermore, the deal is expected to increase spirit exports to India by 180%. This is a massive win for Scotland, for the whisky industry and for West Dunbartonshire. Increased bilateral trade, increased wages and GDP growth are set to grow the Scottish economy by £190 million a year, and the Scotch Whisky Association has described the tariff cuts as “transformational”, with the potential to increase exports by around £1 billion over the next five years.
This deal is a clear statement of intent that the UK is open to trade, serious about growth and prepared to engage constructively with the world. However, these deeper relationships bring deeper responsibilities. I am encouraged by the growth in relations between India and Britain, which is why I hope that we can open up meaningful dialogue about diplomatic issues.
As most of the House will be aware, my West Dunbartonshire constituent Jagtar Singh Johal has been arbitrarily detained in India since 2017. It has been over eight years now—3,020 days. In 2022, the United Nations working group on arbitrary detention concluded that his imprisonment was arbitrary and called for his immediate release. Last year, he was acquitted of all charges with respect to the only case against him that has proceeded to trial. Despite this, he continues to be detained on eight other cases—all similar charges with the same witnesses and the same discredited evidence. We must do more as a Government than simply raise his case with Indian counterparts. It is often remarked that we must respect the Indian judicial system. However, any legal system that remands an individual—a UK citizen—for over eight years is not worth our respect. Worryingly, he has recently been transferred to Tihar jail in New Delhi, which is infamous for its overcrowding and violence. I hope that his case can be resolved and his release advanced following this closer and friendlier relationship with India.
I advise the House that today is Jagtar’s birthday. He will be 39 today; this will be his ninth birthday detained in an Indian prison. His family in West Dunbartonshire are deeply concerned about his wellbeing. They have shown extraordinary resilience and dignity over many years, and they continue to hope for progress.
This agreement marks a new phase in our UK-India relationship. It establishes regular channels of engagement and strengthens trust between our two Governments. I truly hope that this renewed partnership can support continued constructive discussions about Jagtar’s case, with the aim of securing his release and return to his family in Dumbarton. I urge the Government to continue raising this matter consistently and carefully with the Indian authorities, and to ensure that Jagtar and his family know that he remains a priority to us.
On behalf of West Dunbartonshire, I warmly welcome this comprehensive economic and trade agreement. It is a deal that will deliver real economic benefit by supporting jobs, driving investment and strengthening our whisky industry. It means opportunity for workers, business, tourism and future generations. It is a major milestone in our relationship with India—one that is future-focused and built on renewed trust. It is testament to this Government’s promise to deliver, and it positions our United Kingdom to grow and compete in a rapidly changing world.
The deal invests in our future and will have a real, meaningful impact in my constituency. I fully support it and look forward to seeing it deliver for West Dunbartonshire and the United Kingdom as a whole, but I also hope that this closer relationship can help bring resolution to the deeply troubling case of my constituent Jagtar Singh Johal and deliver the outcome that he and his family deserve.
Katie Lam (Weald of Kent) (Con)
The Indian Government are highly unusual in their approach to trade agreements. Unlike most other countries, India has a long-standing policy of using trade deals to try to secure favourable treatment in the immigration system. This deal, unfortunately, is no different. Under the terms of the agreement, Indian companies will be able to transfer their workers to this country far more easily and, once they are here, those workers will be able to avoid national insurance for up to three years, needing only to pay into the Indian social security system—payments that are, unsurprisingly, much lower than here in the UK. This national insurance holiday will make it much cheaper to hire Indian workers, especially in fields such as IT and engineering, than domestic talent.
Imagine a British IT firm is set to hire a computer programmer for £60,000 a year. On top of that, an employer must pay £8,250 in national insurance. That totals £68,250. To hire someone on the same salary, their Indian competitor would only need to pay about £1,470 to the Indian employee provident fund, to which mandatory contributions are capped at 15,000 rupees a month—about £120. That totals £61,470. Under the Government’s deal, it would, therefore, be at least 10% cheaper to hire an Indian worker than a British one. That is absurd.
Iqbal Mohamed
Does the hon. Member agree that employees of Indian companies who are sent here to work for three years and who then may stay on would normally not be paid the British salary level and would be happy to accept a lower salary? As well as saving on national insurance, these companies will be saving a lot more money by underpaying their employees.
Katie Lam
That is an important point because, as I am about to talk about, we have double contribution conventions with other countries, but not with other countries with economies like India’s where so many people—well north of a billion people—would be happy to do these jobs for much lower salaries than our workers at home would expect.
As I say, it is true that we have double contribution conventions with other countries. These aim to simplify intracompany transfers for international businesses. However, these agreements are usually struck with countries that have compatible economies, similar educational outcomes and comparable social security systems, such as Japan or Canada. India stands alone as by far the largest and least wealthy country on the list. In exchange for a deal with India, this Government have chosen to sell out skilled British workers who have worked hard to get where they are by allowing Indian firms to undercut them. We will see highly skilled British workers in cutting-edge fields, such as engineering, priced out by Indian workers. Given the relative markets and educational systems in the UK and India, we should not expect that always to be a like-for-like swap in terms of talent.
We have already seen this model take hold in the United States. There, Indian consultancy firms lease their workers to American companies, who are then able to pay an Indian worker far less than they would need to pay an American. The result has been a massive expansion in the number of lower-cost Indian workers at the expense of American workers. Most other countries are perfectly happy to strike trade deals without forcing us to undercut our own workforce. This Government should have expected India to do the same.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
I am grateful for the opportunity to speak in this debate. I want to start with huge thanks to my colleagues on the Business and Trade Committee for helping to inform the debate with a report that was agreed cross-party and that provided, if anything, a reasonably warm welcome for the Government’s work in securing this free trade agreement, but with a number of caveats, which I will touch on.
Before I set out the Committee’s evaluation of the agreement, it is worth marking this moment. The Minister, who is not known for underselling such moments in the House, actually could have sold this one rather more. Although we do not know quite when he will get the Gulf co-operation deal, which is no doubt imminent, over the line, or the Swiss deal—presumably it is not too far off—this could well be the year when he crowns a number of free trade agreements signed since we left the European Union. They could, in effect, create a triple ocean system of alliances that basically brings UK free trade agreements to about 46 countries in all, home to 2.5 billion people and blessed with something like 60% of world output. That is quite an achievement.
Pro-Europeans on the Government Benches will, of course, say that we can now look at the prize of what free trade agreements have brought compared with the losses entailed since we left the European Union. About £14 billion of GDP uplift is forecast as a result of the free trade agreements that we have signed. That is much less than the perhaps £140 billion hit to GDP that we have had since leaving the European Union. But I will not provoke you, Madam Deputy Speaker, by dwelling on that point for too long. None the less, this India free trade agreement is the keystone of that new architecture. It connects us to one of the world’s fastest growing economies and anchors us in the Indo-Pacific for decades to come. It is also worth saying that this is a significant moment for India, because this is not the only deal that India has signed, as the Minister said; it has also signed the EU deal, and it appears that there is a deal with the United States. India is on the cusp of the biggest transformation in its trade policy since independence. It is a country that has long been defined by its protectionism, but it now chooses to use its trade agreements as the anchors for ambitious domestic reform. If these agreements hold, as I hope they will, with the exception of agriculture, India is now moving from selective liberalisation to something approximating a near-open economy. That is a very significant moment in India’s long history, home as it is to about a sixth of humanity.
These trade deals are not the traditional kind of “Swiss cheese deals” with lots of carve-outs, delays and exemptions. India is now set to almost fully liberalise its manufacturing sector within seven to 10 years. That is a step change by any historical standard. For the first time, India has agreed deals that will be policed by powerful external partners, not just the Minister—a powerful interlocutor in any trade negotiation—but by the combined might of the European Commission.
For an Indian Government who have been protectionist by conviction for a long time, this represents an important reversal of deep nationalist instincts. As one of the world’s great homes of free trade, our nation should celebrate that. I hope that the Minister can use Delhi’s new-found philosophy in his conversations at the World Trade Organisation and elsewhere over the course of the year. Let us face it: we all need more allies for free trade in this world. If we are to build what the Finnish call “values-based multilateralism”, which is probably the best safeguard for peace in this world, India’s role in promoting free trade could be an important component. Another important dimension of that new posture relates to China. If India does indeed grow a low-cost manufacturing sector, the world will need to depend much less on China.
All in all, it is important that the UK has played its role in securing that agreement. The Committee’s report confirms that the agreement secures substantial tariff liberalisation in what is a highly protected market. As the Minister said, Indian tariffs are reduced or eliminated —by our reckoning—on 92% of UK exports by value, with around 64% of tariff lines liberalised on day one. The Government modelling, such as it is—always a bit speculative; always some interesting assumptions; always a bit long term; and always a bit difficult to pressure-test—suggests that the deal will add nearly £5 billion a year to UK GDP by 2040, and raises UK-India trade by £25.5 billion. Those are the numbers that the Minister rehearsed in his opening speech tonight.
The Committee’s analysis, however, presents more meaningful numbers for UK business. The £400 million-worth of tariff savings in year one is real revenue for UK businesses. That will flatter the bottom line, and, for businesses that are under pressure for reasons that we will set out in a report on Wednesday, it could provide much important cash flow. Those tariff savings could rise to about £3.2 billion over 10 years, as export volumes improve. There will be clear future gains for particular sectors. We think there could be a significant prize in the automotive industry, although there are implementation challenges, and clarity is required on how the quotas will work in practice.
As the Minister said, and as we heard from other hon. Members, spirits exporters will do extremely well from this new bargain. They will see reductions in the extremely high tariffs of today. As the Minister belaboured, UK firms will for the first time secure access to India’s central Government procurement market. That is a very large number. Whether our firms can genuinely compete for those new contracts is something that the Committee plans to study carefully.
When the deal was signed and first published, there was a lot of noise in the media about migration and mobility, and the Committee took a lot of evidence on that. We concluded that the agreement is not, in fact, a big migration deal, and nor does it materially change overall migration policy. As the Opposition spokesperson, the hon. Member for Arundel and South Downs (Andrew Griffith), pointed out well, it provides limited facilitation of mobility for skilled professionals linked to trade and services delivery. It could go much further in the future, but given where the Home Office positions itself on that policy at the moment, we accept that there will not be much progress in the near term.
The other real advances reflect years of negotiation and should not be dismissed, but the Committee wishes to underline that there are very significant risks attached to this agreement. India is not a frictionless market; tariffs were never the only barrier. The regulatory system in India is complex, decentralised and highly discretionary. Many of the barriers—be they licensing requirements or certification documentation—are at the state level, and the state-level variation, and state-level stubbornness in bringing those barriers down, will require an awful lot of work in India by His Majesty’s Government. That is why the successes of this agreement depend less on what is written in the treaty text, and far more on whether firms can operationalise it in day-to-day, week-to-week business.
I am glad that the Minister sought to take this bull by the horns in his opening remarks, because we are being asked to debate a treaty at a time when the Department for Business and Trade is seeking 40% reductions in export support staff. He went out of his way to stress that those headcount reductions would not be in India—I think that was the guarantee that he gave the House. That is important because those officials are responsible for helping firms to navigate the rules of origin, quota management, regulatory blockages and enforcement failures. They will also be required to staff a lot of the working groups that he and his counterpart will oversee. I worry that the reduction in export support staff in the United Kingdom will deny firms in Britain the knowledge and connections they might need to exploit the full possibilities of this new agreement.
Iqbal Mohamed
The UK is well regulated: we have auditing and verification, and there is a level of trust in the system for products, services, food, pharmaceuticals and agriculture. I am a big fan of India—my heritage is Indian, and my family is from India, so I am not here to criticise India unnecessarily—but the culture of compliance there is not on the same level or as embedded as it is in Europe and the UK. We would need more audits and external inspections to confirm that the products coming to our shores meet our standards, and for that the Government must invest more in resources, not reduce team sizes. Does the right hon. Member agree?
Liam Byrne
The hon. Member is exactly right. When the Committee published our report, we lamented that there was not a full-scale, full-blown implementation plan alongside the proposals. To a degree, those are difficult things to write, because it is difficult to forecast how quickly the treaty will go through the ratification process needed in India, for example, but we heard evidence that some markets—not least in automotives—had been chilled. Of course, if people know that there are huge tariff and price savings on the way, why would they not delay their purchase rather than make it today? We think that there could have been some wisdom in at least attempting an implementation plan, not least a resource plan that goes alongside the treaty—and perhaps even something tabled in time for tonight’s debate, to reassure the House that the Government will watch the implementation of this deal like a hawk.
The Select Committee has decided to go to India in March to understand how this deal will be implemented in real life. If our export support work is hollowed out, the consequences will be predictable: smaller exporters will walk away, utilisation rates for the treaty will remain low, and the headline gains will fail to reach the wider economy and benefit the constituents who sent us to this House to debate this treaty. I hope that the Minister will, as quickly as he can, rustle up an implementation plan to tell us how the agreement will be implemented. I very much hope that he will be able to align the ambitions for the treaty with the level of resource that he and his Department are investing in it.
The House will want to know that the Committee also tested the treaty against the deals secured by our allies in the European Union and the United States. Compared with the EU-India deal, it seems that the UK has moved faster and secured earlier liberalisation on some tariff lines. We have liberalised 92% of the value of our exports, while the EU has secured 96.6% of its exports, but both were for roughly the same level of market access offered to India—offers covering over 99% of India’s exports by value to the UK and EU markets.
The EU deal obviously covers a much wider volume of trade than we deliver with India, so the EU will therefore enjoy much bigger total tariff savings and a much bigger quota access, particularly for the automotive sector, among others. However, as the Opposition spokesman rightly flagged, there was limited progress on services—we flagged that, too. Services are the lifeblood of the British economy and of our exports—we are a services superpower. The EU’s negotiating position appears at first blush to be broader and deeper, but the final outcomes will remain unclear until the final text is published.
Compared with the United States, the contrast is different again. It appears that the White House has prioritised strategic leverage and tariff pressure over comprehensive liberalisation, extracting concessions through market power, not through traditional FTA approaches. The UK has chosen a different path: ruled-based, negotiated commitments and long-term engagement. I think that choice can work for us, as long as we are ruthless about ensuring good implementation.
We are sceptical about the level of services mobility that has been delivered, and about the absence of a bilateral investment treaty—we think that is a significant gap in our long-term framework. We also recognise that policy volatility and regulatory risk still matter. In particular, India’s record on investor protection remains uneven, and its tax administration is still too often used in a way that is, frankly, weaponised. Ensuring that we have good ways to monitor and escalate this will be important if the deal is to be a success.
As my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) flagged up, some UK sectors, like textiles and ceramics, will face increased competitive pressure, and although the agreement does contain binding human rights provisions, the responsibilities of UK firms do not end at the border. Being strong on human rights protection, upgrading the dysfunctional Trade Remedies Authority and pressuring the Competition and Markets Authority to publish a foreign subsidy control regime would be extremely welcome.
The final point I want to flag is an issue that came up during the Minister’s appearance in front of the Committee, and I have not heard enough tonight or since he came to the Committee about its progress. The reality is that India remains one of the biggest customers of Russian oil. That money is fuelling Putin’s war machine, and as recently as January, His Majesty’s Government had not introduced controls that were in place in the European Union to ensure that oil derivatives made from Russian oil were banned from this country. Indeed, when Politico reported on this earlier in the year, it noted that something like one in six units of Britain’s aviation fuel imports were derived from Russian oil. That is not something that the Minister will want to tolerate for very long. For a long time, he has been one of the leading voices in the House in standing up to Putin and the evil of Russia, so I hope during the wind-ups he will say more about exactly what he is doing, along with his colleagues, to ensure that we are stopping the possibilities of importing Russian oil derivatives from India.
In conclusion, our overall take is that this is a good deal that is in the UK national interest, but I do want to supply one final note of dissent. When the CRaG legislation was introduced to the House in 2010, it was always the intention of Parliament that when free trade deals came for debate, there would be a votable motion. That would allow Parliament to exercise the licence that it was promised to delay ratification if it was discontent with the terms of an agreement before us. I am grateful to the Leader of the House and the Minister for ensuring that there is a general debate tonight, but it is not a debate on a votable motion. If this Parliament is to be a strong watchdog and guardian of the Executive, it is important that what were once prerogative powers are transferred to us, here in this House. I hope that this is the last debate on a free trade agreement that takes place on a general motion; in a democracy, we decide things by voting.
Stephen Gethins (Arbroath and Broughty Ferry) (SNP)
May I thank the officials who have been working with the Minister on this trade deal? I am sure he will not mind me doing so. These trade deals are difficult, and they take a while to come to fruition. I would also like to acknowledge the reduction on whisky duty—although, as my hon. Friend the Member for Moray West, Nairn and Strathspey (Graham Leadbitter) rightly highlighted, that has to be matched by domestic policy towards the whisky industry. That being said, I know that distilleries such as Arbikie in my constituency, which trade globally, will be absolutely delighted with that measure. It would be helpful, as we have heard from the Opposition Front Bench, to know more about some of the safeguards that have been put in place in relation to food and drink; the Minister has mentioned some, and I hope he will mention a little more later on.
This is exactly the kind of deal that we were told only Brexit Britain could deliver—that only if the UK left the European Union would we be able to deliver these kinds of deals. Except that the EU has gone and done exactly the same. Imagine my surprise when I discovered that all that stuff about Brexit Britain was absolute nonsense, and that the EU has been able to do exactly the same!
Stephen Gethins
It would be remiss of me not to give way to the hon. and learned Gentleman.
Jim Allister
What the hon. Member has not mentioned is that it took the EU 20 years to get a deal with India. It took the United Kingdom three.
Stephen Gethins
The hon. and learned Member for North Antrim (Jim Allister) says that I have not mentioned that, but I had just started. Of course, he represents a part of the United Kingdom that we have all been told gets the best of both worlds by being in the single market and the customs union. Imagine: the best of both worlds, as we have been told by Conservative and Labour Members!
On that point, will the Minister tell the House why the EU has been able to remove more tariffs on its EU goods? There is also—I wonder whether he will talk about this—a stronger commitment on climate sustainability as well as trading, including elements dealing with climate change. Of course, on bilateral income, although the EU is a bigger market and therefore the figures will be bigger, we know that the percentage for EU savings is also higher. I know that the Minister used to be a European enthusiast, although since he has gone into government that has dissipated somewhat.
Iqbal Mohamed
Does the hon. Gentleman agree that being inside the EU would have given us much more bargaining power? The reason the EU has a better deal with India is because it has collective bargaining with so many countries. We are a lone wolf, a little island, and countries agreeing trade deals with us know that they have got us over a barrel.
Stephen Gethins
The hon. Member is right. The UK as a second-tier power has left itself poorer, as the Minister, to his credit, has acknowledged, as did the hon. Member for Witney (Charlie Maynard); it is just a pity that the Liberal Democrats do not agree with me and the hon. Member for Dewsbury and Batley (Iqbal Mohamed) that we should rejoin.
Stephen Gethins
I did say that the previous intervention would be my last, but I really ought to give way to the Minister.
Chris Bryant
If the hon. Member is in favour of collective bargaining, surely he is in favour of Scotland doing its collective bargaining within the United Kingdom.
Stephen Gethins
But if only we were listened to! We feel about as listened to as the leader of the Scottish Labour party at the moment, and that is not terribly well listened to. I am a great believer in a 21st-century model of Union based on the treaties—one that listens to its different member states, makes its members richer and gives them more rights, rather than a pretty out-of-date and outmoded 18th-century version of the Union. I am glad the Minister has given me the opportunity to make that point.
The right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) rightly talked about services and other issues. The EU has negotiated higher levels of freedom of movement. On services—again, it would be remiss of me not to talk about the higher education sector, and I wonder whether the Minister will mention that when he sums up. He will be aware of the huge impact that trade with India has on our higher education sector. In Dundee, for example, there was a huge amount of student recruitment from India—more than from the entire European Union, although post Brexit that fell off and we were left more isolated. There were 810 Indian students in 2022-23, and 365 in 2024-25—a decrease which led to that university’s significant financial crisis. It is not alone in that within the higher education sector.
The former principal, Shane O’Neill, talked about the “negative impact” of UK policy, and Universities Scotland has said that the loss of dependants and the “toxic” rhetoric around migration in the UK have had detrimental impact on the higher education sector. I refer the House to my entry in the Register of Members’ Financial Interests; I still do a little bit of teaching at the University of St Andrews, and I have to mention the value that comes from having more international universities. It is not just about the value that comes from the income; it is the value to the richness of the teaching regime, through our students having access to others from across the world, and to our research. It is exceptionally important. I wonder whether the Minister will touch on that point, because UK policy has had a hugely detrimental impact on my constituency, particularly in relation to the financial challenges faced by the University of Dundee, and I am truly sorry to say that we saw the toxic legacy of the Conservatives’ migration policy continued by the Labour party in government.
The right hon. Member for Birmingham Hodge Hill and Solihull North spoke about scrutiny. If we were Members of the European Parliament we would get full access to the trade agreements, so will the Minister look at the way that the European Parliament deals with issues such as voting rights, scrutiny and publication, and see what examples of good practice the UK Parliament could pursue?
I am glad that the hon. Member for West Dunbartonshire (Douglas McAllister) has not taken up the offer of being across the road at No. 10 and that he is here. I am pleased that he raised his constituent, Jagtar Singh Johal —he made a great case and, if he does not mind me saying, continues the good work done by Martin Docherty-Hughes. I think we all want to wish Mr Johal a happy birthday, but we all sincerely hope that he will have a happier birthday this time next year. I thank the hon. Member for his work, and I add my voice to those asking the Minister to respond.
Finally, a number of hon. Members have raised the question of Russian oil. Will the Minister set out what is happening with Russian oil, what conversations were had with Indian officials and whether there are any refineries that could be targeted as part of the broader sanctions process?
Ayoub Khan (Birmingham Perry Barr) (Ind)
We all want a trade deal—a symbiotic relationship through which not just our country succeeds, but any other country that we trade with also succeeds—but that must not and cannot be a compromise that undermines the core British value of upholding the law, as well as ethical and moral values. However, when it comes to this agreement, that is exactly what we have done. Our commitment to human rights, climate change and justice have been sidelined for obvious commercial gain, and this kind of moral weakness has become a defining feature of pretty much everything that this Government have done on the world stage, discarding human rights at the first sign of pushback and branding cowardice as pragmatism.
Time and again we have seen the same story. We all know that when the Prime Minister went to China, the Uyghurs—who we all know face forced assimilation, abuse and genocide in Xinjiang—were the last item on his agenda, if not left out entirely. Today, British Jimmy Lai has been sentenced to 20 years in jail for defending democracy in Hong Kong, so it is clear that any attempts to move the dial on that front have failed miserably.
Without doubt, the same can be said of the Prime Minister’s trip to India. He promised to raise the case of Jagtar Singh Johal, who many hon. Members have mentioned—a British Sikh who has been imprisoned for eight years without conviction, all because he stood up for the most basic human rights for Sikhs in India. Environmental and labour standards have been neglected too. The Government refused even to complete an independent human rights risk assessment that would have highlighted the violations that British money was at risk of perpetuating. That refusal speaks volumes.
Nowhere is this Government’s moral abrogation more glaring than in their silence on Kashmir. A region born out of the catastrophic failure of partition in 1947, Kashmir has endured decades of broken promises and betrayed commitments, yet the Prime Minister did not even pretend to raise its plight with Prime Minister Modi. For a people long accustomed to British indifference, this was simply the latest insult. The region is not only occupied partly by India, but had its constitutional autonomy removed in 2019. For decades, the people of Kashmir have seen their most fundamental rights trampled upon; we have military occupation, political repression, arbitrary detentions, extrajudicial killings, and restrictions on freedom of speech and assembly.
The suffering endured by the Kashmiri people at the hands of India is nothing short of horrifying, and yet it is in that context of systemic and unashamed oppression that Kashmiri people’s fight for self-determination continues to be ignored, overlooked by nations that are more interested in kowtowing to an occupying power for economic gain. For more than 75 years, successive British Governments have washed their hands of a crisis they helped to create, hiding behind the fiction that it is merely a matter for India and Pakistan.
Even now, when we have presidency of the United Nations Security Council, we are silenced by our political objectives and paralysed when it comes to addressing injustice around the world. This Government are always talking about their non-tolerance of affronts to justice, but when the time comes to act on those promises, they falter. It is not just about priorities—it is a sign of the discrimination that this Government are willing to tolerate on our own shores, when it suits their interest. It speaks to the responsibilities they are willing to flout when sorting out the mess that our empire left behind.
Wherever there are human rights violations, we cannot neglect our moral and legal obligations abroad for quick wins at home. Just as there should be with any trade deal struck by this nation, the free trade agreement with India should have included a clause that made the benefits of trade conditional upon the protection of human rights, the release of political prisoners, the enforcement of labour standards and the liberation of the oppressed. I heard the Minister mention the fact that we have such a clause, but it is not enforceable; unfortunately, that might as well not have been included in the documentation, because it has no bite.
If there are no meaningful sanctions to deter nations from committing such atrocities, how can we expect them to change? I gently request that the Government reflect on how committed they truly are to upholding international law and on their willingness to have tough conversations with our allies. In a world where, I am afraid to say, we are losing international law and the values aligned to it, Britain must be a binding force that holds it together no matter what. I echo what the hon. Member for Bradford East (Imran Hussain) has said repeatedly in this Chamber: we must uphold our moral and legal obligations. Wherever there is injustice, we must be the force that stands up to it.
John Cooper (Dumfries and Galloway) (Con)
It would remiss of me not to touch on the fact that the roots of this trade deal stretch back to the previous Conservative Government, and not to mention that the then Secretary of State Alister Jack—now Lord Jack of Courance—sent an aircraft carrier stuffed with dancers and pipers from the Edinburgh military tattoo to India, to highlight the unfairness of the regime that whisky faced out there, which this deal does much to address.
I have the pleasure of serving on the Business and Trade Committee, chaired adroitly by the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne). When we talk about these trade deals in the Committee, the Government figures worry me, and he touched on them himself. We have heard time and again that the expected lift in GDP from this deal is around £4.8 billion, or 0.13% of the UK’s GDP, but those figures seem incredibly low. That may be because of a lack of ambition—I hope not—or because of caution on the part of the Government, which is perfectly understandable, but it is incredible that we are expecting so little from these trade deals. We could raise those figures—they must be a floor, not a ceiling—and do much better.
A difficulty that hon. Members have touched on is that the Department for Business and Trade is cutting its head count. Of course the bloated state has to be reduced, but we have to apply those cuts judiciously. It is good that the in-country team in India is staying put, but if the teams in the UK that help businesses here to export are cut, then we will have a problem, and we will kill growth.
We expect modest gains from the comprehensive and progressive agreement for trans-Pacific partnership, yet it offers a tremendous—an absolutely huge—market at a time when the EU’s share of GDP is drifting away. The hon. Member for Witney (Charlie Maynard) is keen on returning us to a customs union, but that customs union would commit us to applying EU-set tariffs, taking away the freedom we got from Brexit to strike out and do our own deals. The EU is potentially looking at the CPTPP, but we are already in the partnership. We have first-mover advantage. We should strike out with the confidence that Brexit gives us as a trading nation. Adam Smith literally wrote the book on free trade; this country is a trading nation—that is what built this country—and we should get back to that confidence.
On agriculture, the Business and Trade Committee took written and oral evidence from Tom Bradshaw, the president of the National Farmers Union. He was concerned that while lamb exports could do well through this deal, dairying is once again left wide open to difficulties. That is an issue in my constituency of Dumfries and Galloway; we have some of the most productive grassland in the UK. We make fabulous Galloway cheddar, and I would love to see more of that exported to India. Not much paneer probably comes to this country from India at the moment, but that will change. India is moving at incredible pace. It is hard to believe that in five or 10 years’ time, the Indian dairy industry will not have moved on. The licences that the Minister talked about will be in place, and there will be a flow this way from dairying, which is a concern for that sensitive sector.
The other thing that worries me on the Business and Trade Committee is the much-vaunted EU reset that the Government are seeking. Part of that is a sanitary and phytosanitary deal, which will affect agriculture in the round. Can the Minister tell us what impact that might have on future trade deals? At the moment, these trade deals are struck with the UK based on UK rules and regulations. If we accept dynamic alignment with Europe, we are no longer rule makers in this area; we are rule takers. Will those countries with whom we are striking deals have to look to the EU? Where does that leave us? Does it not hamstring us at a time when, as I say, we have this fantastic opportunity to strike our own deals and hopefully drive growth?
Jim Allister (North Antrim) (TUV)
The Minister was one of the most ardent remainers that this House produced, yet he is proposing a trade deal that would not have been possible if he had had his way; I am sure the irony is not lost on him. It is only because of Brexit that it is possible for the United Kingdom to reach trade deals with countries across the world.
Jim Allister
I will deal with the fact that the EU just signed one.
As I said in an intervention, I was a Member of the European Parliament when Peter Mandelson was a Trade Minister, and I well remember him trumpeting the fact that the EU was going to negotiate a trade deal with India. That was in 2007. It took the EU until 2026 to cobble together a trade deal, such is the pace at which it proceeds. The post-Brexit United Kingdom has been able to reach this deal since 2022, so although EU fantasists seek to draw a parallel, what they say does not stack up.
Stephen Gethins
If Brexit has been so great, why on earth has nobody else followed the UK out the door?
Jim Allister
I suspect that one of the reasons is that the EU made the process a punishment beating of the United Kingdom, in respect of Northern Ireland, so that any other country that was thinking of daring to assert its sovereignty would be frightened out of it. I will return to the impact of this deal on Northern Ireland in a minute.
It is good to see the tariffs fall. Across the board, tariffs on UK products going to India will generally fall from 15% to 3%. However, I have a question for the Minister. From what I read in this deal, it seems that once the deal is confirmed, there will be an immediate, uninhibited flow of Indian goods that come under the deal into the United Kingdom, but it seems that the reciprocal movement of goods will be on a progressive basis, rather than immediate. Perhaps the Minister will explain to the House why that is. Why do the Indians get immediate access, but we get truncated and delayed access? We would all be interested to hear that.
I note that the deal reduces the horrendous tariffs on whiskey, but they are still at a very high level of 75%. I have Bushmills in my constituency, which provokes my interest in this issue. It provides good jobs. Ultimately, we are told, over 10 years, the tariff might reduce to 40%, but that is still a whopping tariff, though, yes, it is much better than 150%.
I want some clarification from the Minister on a point relating to vehicles. A portion of this agreement deals with access to the Indian market for United Kingdom vehicles, but that access is capped. May I ask explicitly if that includes buses, or is it just cars? It is very important that it includes buses, because in my constituency we have Wrightbus, which produces quality buses, and we also have buses produced in Falkirk in Scotland, and elsewhere. It is important that there is access across the vehicular market, that it includes buses, and that it is not unreasonably capped. Perhaps the Minister can explain the why of the cap.
I come now to the absurdity of the implementation of this deal, the Windsor framework and the protocol that afflicts Northern Ireland. Under the Windsor framework, we in Northern Ireland are left under the EU’s customs union. That means that any imports from India come to Northern Ireland subject not to the tariffs set forth in this deal, but to EU tariffs. Our exports, such as Bushmills whiskey, go out under the deal, but imports are blocked from having whatever tariff applies for the rest of the United Kingdom. We are subject to the EU tariffs; that is a common feature across all the deals that have been done and will be done.
Iqbal Mohamed
Maybe the hon. and learned Member can enlighten me. A provision like that had to be introduced to keep the border between Northern Ireland and Ireland friction-free. Would not removing the Windsor framework impose a hard border between the two nations?
Jim Allister
No, it most certainly would not. In modern times, there is abundant opportunity to develop a scheme, with the assistance of modern technology, that would allow for mutual enforcement when it comes to something as fundamental as international trade.
If a company in my constituency wants to sell buses to Germany—I will stick with buses—it must make them to the standards of the German customer. If a German company wants to sell buses to the United Kingdom, it must make them to the standards of the United Kingdom. That is the fundamental starting point for trade. We create a circumstance wherein each country enforces the standards of the other, and we thereby protect the market of the other. To underwrite that, we introduce a criminal sanction saying that if any company in the United Kingdom breaches those rules, there is criminal liability, and we will look for reciprocal arrangements. That is the essence of mutual enforcement. That would work, but instead, we have sacrificed sovereignty over part of our country to a foreign jurisdiction, namely, the EU. We have said to it, “We will subject all our economy to your rules, which we do not make and cannot change,” and we did that utterly unnecessarily.
The real bite of unfairness in that is that many companies in Northern Ireland do not trade outside the United Kingdom—many do not even trade outside Northern Ireland—but they are caught by the same rules as if they did. They must make and market their goods as dictated by the foreign jurisdiction. They need none of the protections necessary for the EU single market, but they face the imposition of unnecessary restrictions.
The issue really reduces to this: are we a United Kingdom? If we are a United Kingdom, the laws of this nation should be made by this United Kingdom, not by a foreign jurisdiction, which imposes on my constituents in 300 areas of law. These are laws that we do not make and cannot change. We are a supplicant rule taker. That is so fundamentally wrong. The Minister will give me—and has given me before—a rather trite response: “Oh, that is all because of Brexit!” Sorry, but it is not. It is because we in Northern Ireland did not get Brexit; the Windsor framework denied us Brexit. It kept us in the EU’s customs union and single market, whereas the rest of the United Kingdom escaped. That is why we have this absurd situation where we do not get the full benefit of these trade deals. As a representative of my constituency, I ask other Members of this House: why are my constituents less important or entitled in these matters than those of every other Member from Great Britain?
We then have some in this House, such as the hon. Member for Arbroath and Broughty Ferry (Stephen Gethins), who want us all to rejoin the customs union so that we cannot make trade deals, whether with India or any country. We could then have only the deals that someone else makes for us—it is such absurdity. Those are the fundamental issues that I would like to see addressed.
As for getting the best of both worlds, that is a fantasy for Northern Ireland, and there is a very simple reason why. We might have access to the EU market—as GB does through its trade deal with the EU—but we forget that to bring all our goods and raw materials from our main market in GB, they have to pass through an international customs border, with paperwork, checks and extra costs.
Jim Allister
It is not Brexit but the Windsor framework. We did not have a Brexit, and that is what causes the Irish sea border. There is this fantasy that Northern Ireland is in some special position, but we have the worst of all worlds. Although we were told that, under the Windsor framework, we would become the Singapore of the west, not one extra job has been created by foreign direct investment, which proves what a fantasy it is. The reason it is a fantasy is that no company will set up on the basis that they could sell into the EU—as they can from GB—and forget about the fact that the raw materials will be subject to an international border and the associated extra costs, which more than cancels it out. I have probably tested your patience, Madam Deputy Speaker, so I will leave it there.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
Like everybody across this House, as a proud British citizen, I of course support the Government’s intentions in the growth strategy and their efforts to agree mutually beneficial trade agreements between countries after the debacle of Brexit, with which we lost collective bargaining and the benefits that we enjoyed from EU membership.
I associate myself with the remarks of the hon. Member for Bradford East (Imran Hussain) and my hon. Friend the Member for Birmingham Perry Barr (Ayoub Khan) on the absolutely mandatory obligation on Britain to ensure that, whatever trade deals we negotiate with whichever country, wherever in the world, human rights are front and centre in those negotiations.
Thousands of my Kashmiri diaspora constituents and their families are suffering. They have been suffering for nearly 80 years, and it is about time that Britain took a lead in helping alleviate the occupation of Kashmir and the illegal treatment of citizens there to allow them the right to self-determination. Building on the issue of human rights, I also join the hon. Member and my hon. Friend in expressing my profound sadness and disappointment that we are signing a free trade agreement with a leader of a Hindu nationalist governing party that has, for decades, violently persecuted Muslims, Christians, Dalits and other minorities in India for their religious belief or their class status, and the millions of people in occupied Kashmir.
Most egregiously, as Chief Minister of Gujarat in 2002, Modi facilitated a pogrom that resulted in over 1,000 individuals, the majority of whom were Muslim, being murdered amidst widespread reports of sexual violence, looting and property destruction. The exact death toll of the Gujarat riots is unclear, but it is estimated to have exceeded 1,000 men, women and children, the vast majority of whom were Muslim. According to Genocide Watch, during the massacres at least 250 women and girls were gang-raped before being burnt to death. A mob of 5,000 people set fire to houses of Muslims in Ahmedabad’s Naroda Patiya neighbourhood, resulting in the deaths of over 65 people. Before being burnt and hacked to death, women and girls were gang-raped in public. Their male family members were forced to watch the rapes, and they were then killed.
I have a couple of heartbreaking examples. Hina Kausar from Naroda Patiya was pregnant when she was raped. Several eyewitnesses testified that she was raped and tortured, and that her womb was slit open with a sword to extract the foetus, which was then hacked to pieces and burnt alive alongside the mother. Bilkis Yakoob Rasool was five-months pregnant when she was gang-raped, and 14 members of her family, including her three-year-old daughter, were murdered in front of her eyes. The Gujarat Government have now granted early release to all 11 of her convicted rapists.
I was in Ahmedabad myself on the first and subsequent days of these riots. I climbed to the rooftop of my uncle’s home, and I watched the city burn around me. Black smoke was billowing from every direction. I saw at first hand how the leader of a state facilitated and stood by as fanatics murdered, raped and pillaged their way through Muslim communities and neighbourhoods. Modi was complicit in this ethnic cleansing, even if attempts at achieving legal justice have so far proven futile. Since then, he has continued to refuse to accept any responsibility or to apologise for the events that took place, thereby adding insult to injury for the bereaved victims and families.
As Prime Minister of India, Modi continues to engage in faith-based oppression of India’s Muslim, Christian and other minority populations. Homes, businesses and places of worship are unlawfully and arbitrarily demolished —a phenomenon that Amnesty International has labelled “bulldozer injustice”. Communal violence against Muslims is rife, with mob violence and lynchings on a daily or weekly basis.
I gently remind the Government of how innocent civilians are being treated by the Government with whom we are signing this trade deal. I urge them to do everything in their power to get the best deal that we can, but without compromising the principle of human rights for all. Muslims, Christians, Dalits and others are relegated to the status of second-class citizens and subject to collective punishment. The Government should instead pursue an economic diplomacy that recognises the importance of religious tolerance and pushes to promote peaceful co-existence of groups with different beliefs. Signing this trade agreement—and with it, exchanging a reduction in tariffs for our values—sends a dangerous signal to the world that religious bigotry and violations of international human rights law are permissible.
Since Brexit, successive UK Governments have shifted away from integrating enforceable human rights clauses into trade deals; they have instead opted for profit over people by adopting a values-free approach that starkly diverges from the human and workers’ rights provisions that the EU—albeit imperfectly—championed. Shame on them, and shame on this deal! The Government should follow the Human Rights Committee’s proposals that standard human rights protections should be included in all agreements, and that we should begin to treat human rights as something that applies to all individuals of any religion, anywhere in the world.
Dame Harriett Baldwin (West Worcestershire) (Con)
Soggy poppadoms, buses, a lot of whisky, pottery, bricks, some Galloway cheddar and even an aircraft carrier promoting whisky—those are some of the colourful items mentioned in this debate, which brings to life the impact across all our constituencies of this UK-India comprehensive economic and trade agreement. As such, it is a pleasure to close today’s debate on the UK-India comprehensive economic and trade agreement. This debate forms part of the process of constitutional reform and governance that Parliament has adopted, whereby we spend 21 sitting days scrutinising agreements such as this one.
Despite the fact that other things happening in this building this evening have perhaps distracted the attention of some Members, particularly those on the Government Benches, we have heard that this agreement carries a lot of significance. In particular, I draw attention to the excellent and detailed speech made by my hon. Friend the Member for Weald of Kent (Katie Lam); she highlighted some of the economic incentives this agreement will create when it comes to employing British people versus Indian people to do the same jobs here in the UK. When the Minister responds to the debate, I would be interested to hear him answer those points. My hon. Friend the Member for Dumfries and Galloway (John Cooper) also raised an important issue about dairy. As I understand it, there are currently no licences for dairy products coming into the UK from India, but that could change in the future, so it would be interesting to know what process the Government would adopt to address that.
As my hon. Friend the Member for Arundel and South Downs (Andrew Griffith) said in his opening speech, free trade is a key belief among Conservative Members. That is why we pursued trade agreements with the EU, Japan, New Zealand, Norway, Iceland and Liechtenstein, as well as the comprehensive and progressive agreement for trans-Pacific partnership. Indeed, it was predecessors in the previous Government who laid the groundwork for the agreement that is before us today. As has rightly been acknowledged in many speeches this evening, this agreement represents a Brexit dividend—the ability to pursue an independent trade policy and to deepen our relationship with one of the world’s fastest-growing economies.
However, recognising that achievement does not mean we can ignore the areas in which this agreement falls short. Many of those points were raised by other Members in this debate. The Chair of the Business and Trade Committee, the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), made the point that the Government risk undermining the benefits of the agreement through their planned 40% cuts in UK export support staff. I invite the Minister to once again reconfirm to the House that those cuts do not include staff in India who will be working on the implementation of this deal.
The House of Lords’ International Agreements Committee report highlights the stark disparity between goods and services in this agreement. For a country whose economy is so overwhelmingly services-based, that imbalance matters. The agreement contains no meaningful advance on mutual recognition of qualifications; the deal establishes a 36-month target for reaching a conclusion in that area, but what will happen if no agreement is reached within that 36-month period? As my hon. Friend the Member for Arundel and South Downs highlighted, the sequencing of market access is deeply asymmetric, with many Indian exporters gaining from immediate tariff reductions in this country while UK exporters face phased access and quotas. A striking omission is that of legal services, as the House of Lords’ International Agreements Committee has said:
“We view this as a missed opportunity given that legal services comprise a strategically important and growing sector of trade, both in their own terms and in relation to supporting trade in other sectors.”
As others have noted, another concerning omission is the absence of any investment protection. The bilaterial investment treaty that was expected to be agreed at the same time as this deal remains undelivered, so can the Minister confirm for UK firms investing in India what his plans and deadline are for implementing an agreement along those lines? When we compare this agreement with the EU-India free trade agreement, the contrast is quite clear; the EU managed to achieve a full investment protection agreement, and its investors will have stronger legal certainty than their UK competitors. On agricultural products, my hon. Friend the Member for Dumfries and Galloway was absolutely right to highlight farmers’ concerns about dairy being an issue in the future. I invite the Minister to offer farmers up and down this country the assurances they need about the effect that these provisions might have on them in the future.
Finally, we must again address the double contribution convention. We do not know very much detail about it, but we do know that Indian workers posted to the UK will pay no national insurance, and nor will their employers. At a time when British businesses are being asked to shoulder increased national insurance contributions, it is hard to see how Ministers can defend a framework that makes it cheaper to hire from abroad than to employ a worker here at home. Can the Minister explain why the Government have created a two-tier tax system in which British businesses pay more in national insurance while employers hiring workers from India pay nothing at all, and what will he do if he sees British workers losing out in large numbers when this measure comes into force?
In conclusion, this deal is a welcome opportunity for British exporters to explore new markets, but one with many missed opportunities in areas where the UK should be leading, not lagging. The task now is to ensure that this agreement becomes a foundation and not a ceiling, so will the Government treat it as a living agreement? Will they return to the negotiating table and deliver the services access, investment protections and sectoral safeguards that British businesses and workers deserve, and what metrics and milestones can we in Parliament use to continue to hold the Government to account as they implement this agreement?
Chris Bryant
By leave of the House, Madam Deputy Speaker, I will respond to the debate. I know that you were once in this job, so if I get anything wrong, please feel free to intervene and correct me. I am going to crack through as many as possible of the questions that have been put to me. I know that hon. Members like to hear answers, so I will try to answer their questions as fast as I possibly can.
As always, it was a great delight to see the hon. Member for Arundel and South Downs (Andrew Griffith) at the Dispatch Box. He had a bit of a rant about Brexit and how much he is still in favour of it—he will probably be the last person still in favour of Brexit, just as he is the last person still in favour of the Truss Budget, because he helped write it. He made a legitimate point about services. Of course we would like to go further on services, but there are two things that I would say to him. First, we have secured significant advantages in relation to telecoms and construction services, and I have already referred to the better deal that we have had on procurement than the European Union. Secondly, we have been guaranteed most favoured nation status in 40 different sectors, including accounting and auditing services, architectural services, engineering services, higher education, building cleaning services, photographic services, packaging services, convention services and interior design services.
That goes to the point made by the hon. Member for West Worcestershire (Dame Harriett Baldwin) about whether this is going to be a living process. We do not need to return to the negotiating table, because we have a structure built into this FTA that enables us to take things forward. In fact, the first review of the deal will happen on the date it comes into force—as I said earlier, I hope that will be before the summer.
Chris Bryant
I am keen not to give way again, because there is not much time and I have to answer all the questions that I have already been asked.
Turning to legal services, of course we would have much preferred to have been able to secure legal services as part of this deal. We have a very strong legal services sector in the UK—it is excellent. I was with the head of the Law Society in Riyadh last week, celebrating some of the changes and opportunities that are happening in Saudi Arabia, for instance. The difficulty is that, as the Indians made very clear throughout the whole of the negotiating process, law is a noble profession. It is very specifically understood as such within the Indian constitution, so that would have required significant changes to primary legislation in India, and that was not something we were able to achieve.
Similarly, we would have preferred to have been able to secure a bilateral investment treaty, but we stand ready to start that process whenever India would like to do so. I am glad that we have a digital trade chapter, because so much of the trade we do internationally is now digital, and lots of other arrangements do not end up with that provision.
On services, the way we transacted this deal means it is supported by the Federation of Small Businesses, HSBC, Standard Chartered, EY, TheCityUK and Revolut, and I do not think they think of the deal as “soggy poppadoms” at all; I think they think of it as a fine tandoori.
My hon. Friend the Member for Bradford East (Imran Hussain) and several other Members referred to Kashmir, and the hon. Member for Dewsbury and Batley (Iqbal Mohamed) gave us some shocking stories about the situation there. I was once the curate in High Wycombe, which has a large Kashmiri population. They have felt many of the issues relating to Kashmir ever since the 1940s. It has been a long-standing British position that India and Pakistan need to come to a settlement of their agreement. For the purposes of the CETA, the core text chapters define India’s territory as set out in India’s constitution, but emphasise that that is without prejudice to territorial sovereignty or compatibility with international law.
An important point that nobody has referred to is that Pakistan enjoys preferential tariff rates when trading with the UK under the developing countries trading scheme, which offers significant preferential access. Approximately 94% of Pakistani goods are eligible for 0% tariffs, and that runs out for India three years after the FTA enters into force. The deal is not silent, as it were, on the relationship between the two.
Some Members have said that there is nothing in the FTA about human rights. First, that is not true; there are provisions. It is also not true to say that none of it is legally binding. The whole agreement is legally binding, and review processes are built into it in a way that makes it possible for us to monitor human rights. I have to say, the EU deal does not enter into human rights issues either—traditionally, it does not. We want every element of how we engage with another country to reflect the values we want to protect, including opposition to the death penalty, to forced labour and to so many other things.
Chris Bryant
I will not, if the hon. Member does not mind.
A lot of that toolkit lies outside trade. It lies with the human rights monitoring that our high commission in India does regularly. We raise all the individual issues that have been referred to.
Chris Bryant
I will give way to the hon. Member, because I can never resist him. We used to be on a Select Committee together.
Stephen Gethins
I have great respect for the Minister, but he talks about the EU deal not covering human rights. We are all covered by the European convention on human rights, but that umbrella does not exist for countries such as India. That is important, especially because the Minister’s party and my party are committed to remaining within that framework.
Chris Bryant
I am as committed to remaining within the European convention on human rights as I ever was, as are the UK Government. It would be a derogation of our international standing around the world if we departed from it. That is one of the many reasons that I oppose not only the Conservative party, which seems to have gone doolally in recent years, but those Members who were elected as Conservatives and have now joined another political party.
I want to make it absolutely clear to my hon. Friend the Member for Bradford East and to others who have referred to these issues that Kashmiri Britons are of course listened to. The kind of stories that we have heard concern us.
The hon. Member for Witney (Charlie Maynard) pushed in the other direction on Brexit, but he made a good point with which I completely agree. I might slightly disagree with him about the precise amount of harm that Brexit has done to our trade opportunities in the UK, but I note that a very large number of UK businesses no longer export to the European Union, and that is a massive failure for the UK. That is why we are keen to secure a better deal with the European Union, and that is what we are working on. He talked about sanctions and Russia. I am appearing before the Select Committee on which he sits, so he gets many bites of the cherry. I say to the Chair of the Committee, my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), that when I come to talk about trade sanctions in the next few weeks, I will be happy to go into the specific details that he has raised on Russia.
I gently say to the hon. Member for Witney that I get a bit irritated when I hear Lib Dems talking about Russia, because I remember being in this House in 2014 when Russia first invaded Crimea. I know he was not in the House, but the Liberal Democrats were part of the Government. It was not just that Government but many other Governments who essentially allowed Putin to take Crimea with impunity, which has left us with some of the problems we have today. I completely agree with him that we need to debilitate the Russian system as much as possible. We have introduced sanctions on entities, including India’s Nayara Energy Ltd, to ensure that we disrupt Russia’s energy revenues. We are undermining the shadow fleet wherever possible. We have announced a further 500 sanctions.
Chris Bryant
I am reluctant to give way, because I have only another four minutes. The hon. Member is on the Select Committee, so he will soon be able to ask me as many questions as he wants.
Chris Bryant
It will not be one second; that is an untruth.
On 25 October, we said that we will extend our ban on the import of oil products refined in third countries using Russian crude oil.
I will refer specifically to the constituent of my hon. Friend the Member for West Dunbartonshire (Douglas McAllister). It is that constituent’s 39th birthday today. My hon. Friend knows that I have met his constituent’s family. It is good that some of the charges against him have already been dealt with and he has been acquitted. We want to see the rest of the charges—I think another eight charges have been laid against him—dealt with as swiftly as possible. We make that argument to the Indian Government as frequently as we can. My hon. Friend did not refer to this, but I think he would agree that there should be a full investigation into his constituent’s allegations of torture. That is an important part of us maintaining an open relationship with India.
The hon. Member for Weald of Kent (Katie Lam) made a speech primarily about one specific issue. It was brief and to the point, for which I commend her—if only I could learn to do the same. She referred to the double contributions convention. I just point out to her that the previous Conservative Government made almost identical arrangements with a large number of countries, including Chile, Japan, South Korea, all of the EU, Iceland, Liechtenstein, Norway, Switzerland, Barbados, Canada, Jamaica, Mauritius, the Philippines, Bosnia and Herzegovina, North Macedonia, Serbia, Montenegro, Kosovo, Turkey and the United States of America. This deal will not undermine British workers—that is the Select Committee’s finding—and it will not make it cheaper to use Indian workers. This agreement is about highly skilled workers employed by Indian companies on a temporary basis paying contributions to their own country rather than in the UK. The deal has not finally been struck; negotiations are ongoing. That deal will be subject to its own process of going through the House, during which Members will be able to raise points.
Chris Bryant
I will not, as I have only two minutes.
The Chair of the Select Committee made lots of good points. He referred to the Constitutional Reform and Governance Act 2010 and said that a votable motion was guaranteed by the then Minister in 2010. I was the Minister, and I am not sure that I then guaranteed a votable motion, but I take his point about greater scrutiny. When I come to talk about the Office of Trade Sanctions Implementation, I hope we will be able to deal with some of the other issues to which he referred.
The hon. Member for Arbroath and Broughty Ferry (Stephen Gethins) referred to higher education. I am delighted to say that higher education is one of the things that MFN applies to as part of the deal. I was proud that the Prime Minister was able to open two new higher education campuses in India when he visited in October. The hon. Member makes a fair point about the European Parliament’s good practice on trade deals, which I will reflect on.
I did not agree with everything that the hon. Member for Birmingham Perry Barr (Ayoub Khan) said, but I understood the sentiment with which he said it. I just make the point to him that the whole agreement is legally binding. That is why I am glad that we have secured chapters in our deal that have not been in any others.
The hon. Member for Dumfries and Galloway (John Cooper) said that Government figures seemed too low. One of the figures is probably too low, and that is because we tried to err on the conservative side. In particular, some of the figures presume that we will not be doing any additional trade as a result of the FTA, but I think that we will. I think we could say that we will do better.
The hon. and learned Member for North Antrim (Jim Allister) said that it was an enormous irony for a remainer such as myself to be standing here and proclaiming this. The thing is, I deal with the world as I find it, not as I would wish it to be. I cannot unmake the past, but I can make sure that we exploit the present to the best benefit of British business, and that is what this trade deal does.
Question put and agreed to.
Resolved,
That this House has considered the UK-India Free Trade Agreement.