A “quantum leap” of a digital trade agreement between Brexit Britain and India!
That’s the bold claim made by the never-knowingly-undersold UK Prime Minister Boris Johnson following the signing of a deal that aims to double trade with the world’s largest democracy by 2030 from its current total of about £23 billion a year.
Johnson announced £1 billion of new trade between the UK and India which he said would create more than 6,000 jobs. The two countries also signed up to a program whereby young professionals aged 18 to 30 can work and live in each country for up to two years.
This isn’t a full Free Trade Agreement - negotiations on that will take place later in the year - but the Enhanced Trade Partnership (ETP) is seen as a positive step towards that objective. The Confederation of British Industry (CBI) business leaders association said in a statement:
The enhanced trade partnership will usher in a new era of UK-India relations and shows the world the strength of our relationship. As leaders in tech and innovation this enhanced partnership will unlock opportunities for businesses, boost job creation and growth across the country.
One of the key priorities cited in the agreement is around digital with new investment programs announced by the likes of HCL Technologies, Mphasis, Wipro and Infosys.
Infosys is to hire 1,000 new staff in the UK over the next three years to meet a surge in demand for digital services after COVID-19 “exacerbated” the need for skills and infrastructure. The firm will provide training and mentoring around cloud computing, data analytics and Artificial Intelligence spaces with most of the new recruits coming from colleges or universities. Chief Executive Salil Parekh said:
Bridging the digital divide and making quality digital education accessible to every citizen are vital to the establishment of a robust future workforce, and the UK's economic recovery. Our commitment to the UK is to support both recovery and growth through digital acceleration, hiring new talent, and supporting the development and re-skilling of existing talent to meet evolving economic demands.
For its part, Mphasis also intends to create an initial 1000 jobs as well as invest over £25 million upfront to establish a UK center to deliver digital transformation services as well as domain expertise in the UK banking and insurance segments. Nitin Rakesh, CEO and Executive Director, Mphasis, commented:
Having successfully executed at least half a dozen similar transformational partnerships in the banking and insurance industry, we are confident of building for the future and ensuring a client-first approach. I am excited to elevate our presence in the UK to support future growth, improve operating agility, flexibility and harness local capabilities towards bolstering our offerings over the long term.
Wipro meanwhile is setting up a 20,000 square foot Innovation Center in Holborn, London at a cost of £16million, which it says will be integral to providing “advanced digital, cyber security and cloud expertise to both established and upcoming enterprises”. Pierre Bruno, Chief Executive Officer - Europe, Wipro Limited explained:
London is a hub of digital excellence. Our new Innovation Center will draw on the immense talent, digital expertise and innovative potential available here. We are continually impressed by the drive of the UK’s digital economy. Digital transformation is no longer an option. As we have seen, digitalisation of businesses has rapidly accelerated and it’s those businesses who can adapt and in-build resilience who will succeed.
In addition to the digital transformation solutions we offer now – from cloud-first solutions to cybersecurity and 5G services – our new Innovation Center will help us to continue to develop solutions for the future including galvanizing the adoption of new skills and technologies by companies to innovate and re-imagine their products and services, improve operational efficiencies, and drive customer and employee delight, thereby transforming their ability to compete and thrive in the market."
According to technology sector association techUK, India is the second largest source of foreign direct investment into the UK, while UK is Indian tech industry’s second largest export market after the US. As such, the new deal and announcements are welcomed, although techUK cautions that there are still a number of market access barriers still to be overcome. It argues that the tech sector needs a comprehensive free trade agreement that enables cross-border free flow of data with a strong data protection regime, investment, and innovation, and reduces market access barriers such as mandatory local data storage and re-imposing custom duties on e-commerce trade to drive bilateral trade the digital technology space. Julian David, CEO, techUK said:
We are pleased to see that the Enhanced Trade Partnership recognises the critical importance of knowledge and technology-driven trade between both countries. Digital services are going to drive the future of UK-India trading and it is therefore important that digital trade is central to future bilateral trade relations. To capitalize on emerging opportunities and drive collaboration and innovation across borders we must ensure that a future trade agreement includes strong provisions for cross-border data flows with an adequate data protection regime, increased mobility of talent and investment whilst also reducing barriers to business growth. techUK will continue working with the UK and Indian tech communities to advocate for comprehensive digital trade arrangements in the future UK-India trade relationship.
Trade and investment between the UK and India is creating good jobs and sustaining livelihoods in both of our countries.
So says Prime Minister Johnson and it would be churlish not to welcome the inward investment that’s been announced and the prospect of a fuller free trade deal to come. The four tech firms included in the announcement are already established players in the UK, so expansion of their footprint is good to see, as are the reciprocal visa arrangements, although there’s clearly a lot more that can be done on that front.
Still, it’s worth remembering that while India is absolutely a hugely important market for the UK to secure and boost trading relations, in 2019 UK exports to the EU were £294 billion - nearly 43% of total - while imports from the EU were worth £374 billion. Something to ponder as the gunboats head off to Jersey this morning?