‘There is a strong basis for a Free Trade Agreement between U.K. and India’

U.K. Secretary of State for International Trade Elizabeth Truss, 45, a key member of the Boris Johnson government, had a very busy few days in India recently, meeting senior ministers in the Indian government, and key members of the Indian business community over the past few days.

Among those Truss met were finance minister Nirmala Sitharaman, commerce minister Piyush Goyal, information technology minister Ravi Shankar Prasad, and textiles and women & child development minister Smriti Irani. During the Mumbai leg of the tour she also met key members of the Maharashtra government, including Aaditya Thackeray, the state’s minister for tourism, environment and protocol, and also took a tour of the Brihanmumbai Municipal Corporation (BMC) headquarters. She also managed to take a trip to Pune to see the Serum Institute of India (SII) facility and meet SII boss Adar Poonawalla who is at the forefront of India’s Covid-19 vaccination drive.

During the Mumbai leg of her trip, Truss managed to take time off for an exclusive interview with Fortune India over a video call, where she spoke about a potential Free Trade Agreement (FTA) with India, the plans to announce an Enhanced Trade Partnership (ETP) when Prime Minister Narendra Modi meets U.K. Prime Minister Johnson later this year, the areas of collaboration between India and the U.K., and the opportunities for both countries. Excerpts from the interview:

How has the Mumbai trip been?

I am enjoying it. We were at the Serum Institute in Pune this morning, and we’ve been in Mumbai this afternoon. The Serum Institute is a very impressive installation.

You’ve been meeting a number of senior ministers in the Indian government, among them finance minister Nirmala Sitharaman, commerce minister Piyush Goyal, and others. What are your key takeaways from these meetings?

I think, first of all, this is a fantastic opportunity for both the U.K. and India to deepen our relationship. We saw the excellent Budget from the finance minister last week, really going further in areas like investment, insurance, privatisations… I think there’s real potential there for more collaboration between U.K. and India. And I had a very positive meeting with Minister Goyal, talking through the details of our roadmap to ultimately a proposed Free Trade Agreement (FTA), our Enhanced Trade Partnership (ETP)... but of course the United Kingdom is in a unique position, because for the first time in 48 years we have the levers of our own trade policy under our control. We launched the new U.K. global tariff at the start of this year and we are now able to negotiate these FTAs, and at the same time we have control of our migration policies so we’ve been able to announce the new U.K. points-based migration system as well. So we have a fairer system on that. I think that the stars are aligning in terms of the opportunities on both sides and the strong will on both sides to make a closer trade relationship happening. I mean, at the moment we have 23 billion pounds of trade between us. In my view that could be much, much more, given the relative size of our economies. I’m very committed to working with Minister Goyal, I’m here in advance of the Prime Ministers’ meeting to set the framework and to get that ready so that we can have a strong announcement on the ETP and we can build on that for the future.

But what this is ultimately about is delivering jobs and growth in both our countries. We’ve got two complementary economies, we’re both very strong in the areas of technology... India is third in the world in the number of startups, we’re third in the world for the number of billion-dollar tech companies -- tech unicorns -- and what we want from a potential FTA is one that is comprehensive and covers the areas of data and digital and services where both countries have very strong interests.

India has been one of the major investors into the U.K. Do you think there are new areas of investment which could be of greater importance now that the world has pretty much changed after the Coronavirus pandemic?

Well, Indian companies are already the second largest foreign investors in Britain, which is fantastic. And that is responsible for 110,000 jobs across the United Kingdom. And there are all kinds of areas… we’ve been talking about life sciences, infrastructure, green energy… There are lots of new investment projects. What I’ve heard from Indian investors while I’ve been here in Mumbai is a strong interest in making further investments in the U.K. People recognise we have a competitive economy, it’s a great place to live and work, and there is strong growth potential in the U.K… particularly with our new position as Global Britain we are able to deepen our trade with the rest of the world. And our ambition is to become the services and data trade hub, and a deal with India could help realise that ambition.

On the subject of investments, we are also very keen to see U.K. investors invest in the very strong pipeline of projects in India. I mentioned infrastructure of course; there are areas like railways, clean energy, technology, life sciences… again I would like to see more U.K. capital going into India over the pipeline of the next decade or so. We’ve seen those projects laid out, I’ve heard of the very strong opportunities and what we want to see is a two-way investment flow between both our countries for the benefit of our citizens.

India has made considerable progress on the ease of doing business and state governments also compete with each other on that front. This was a concern earlier, and a lot of work has now gone into getting those problems out of the way. Your thoughts on this?

That’s certainly very true, and we have seen significant improvements and some of the announcements in the Budget point to further improvements. I mentioned areas like insurance; there are other areas such as regulations around procurement, and so forth. So there are lots of improvements that are taking place. I’m looking forward to meeting the government here in Mumbai tomorrow to discuss some of these issues. And likewise, now that the U.K. has left the European Union, we’re looking at how we can regulate things better. So we’ve launched a new consultation on gene editing because we want to be more forward leaning in areas like agriculture technology; we’re also looking at areas like digital and data and signing more forward- leaning agreements in areas like the free flow of data. So this is also an opportunity for the United Kingdom to rethink its regulatory framework because as time goes on, as new technologies develop, countries constantly need to be working to stay ahead of the game and keep competitive. I think that’s the desire of the Indian government, and that’s certainly the desire of the U.K. government.

You mentioned startups. What is your expectation from the Indian startup sector?

I think the startup scene here is very, very exciting. And what I would like to see is more collaboration and flow between startups in the U.K. and startups in India. I also want to make sure that we facilitate trade between small and medium size enterprises to make sure that the benefits of trade are felt by all. I think that’s very important so that the public buy in to trade so that they can get the benefits too of easier access into the U.K. market or the Indian market.

How do you think the EU deal will impact Indo-U.K. trade?

The fact that we’ve got a deal with the EU which has duty-free, tariff-free, quota-free access means that the U.K. can act as a hub. With a good trade deal with the EU we’re also working on a trade deal with the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership], with the U.S. and also our potential free trade deal with India. So I think it enables the U.K. to have the flexibility to strike new trade deals with other partners around the world while still having access to that EU market as well.

We’re talking about a potential FTA. How has work on the ETP progressed?

We had very detailed discussions in Delhi on Saturday going through what would be the potential components. We’re going away to do further work on that. We want to make the announcement of the ETP when the Prime Ministers meet, and what we discussed was that there is a strong basis for that FTA and we could potentially see an early interim agreement as well, and both sides are open to the agreement being comprehensive right from agriculture through to services. And we agree on the strong areas of collaboration, whether that is clean growth, technology, and life sciences as well. So there’s a strong basis for progress and we’ve agreed to accelerate the work so that we’re in a good position to make that announcement when the Prime Minister [Boris Johnson] visits.

And when is that likely to happen?

We’re just saying later this year at the moment. You’ll be the first to know!

Given that there’s so much happening on tackling the Coronavirus pandemic in both the countries, what are the further areas of collaboration between India and the U.K. as far as the pandemic is concerned?

There is already strong collaboration. So we worked well together during the initial phases of the crisis in terms of drugs availability, personal protective equipment (PPE) availability. SII has produced 100 million doses of the Oxford-AstraZeneca vaccine. We’re working together on the COVAX [Covid-19 Vaccines Global Access] programme, and India is a strong partner, SII is a strong part of producing those 1.3 billion doses that are going to be given to, I think, 92 countries around the world. And of course I think there are future areas of collaboration and we are looking at what those could be. But the Serum Institute is a fantastic institution. I think the model of working together with the U.K. has worked very well and we absolutely should be doing more.