As Britain’s post-Brexit cabinet led by Theresa May takes charge, the world is filled with both a sense of anticipation and apprehension. India will no doubt wonder whether May will turn out to be as much of a ‘fan’ of India as her predecessor David Cameron undoubtedly was. Cameron’s 2013 visit to India, accompanied by a high-level business delegation, did seem to set the tone for pushing bilateral trade and investment ties. The Indian business community does not expect any disruption as a result of the Brexit vote; rather, it expects the referendum to step up the UK’s need to cut an ‘FTA’ with India. Ardent Brexiteers Boris Johnson and Liam Fox, now in charge of the foreign office and international trade departments, respectively, would be aware that trade deals with the US, China and India can work as a buffer against a possible loss of market access to the European Union — and to other countries with which the EU has trade pacts. Hence, it is not surprising that the FTA issue came up in the recent talks between former business secretary Sajid Javid (now shifted to communities and local government) and Commerce Minister Nirmala Sitharaman. British High Commissioner to India Sir Dominic Asquith has said “this relation will only grow stronger (as) UK is among the largest G-20 investors in India and India is the third largest investor in UK”.

Yet, there are uncertainties ahead for both India and Britain. A post-Brexit government, swept in by a sort of anti-immigration wave, may not relax visa curbs on movement of skilled professionals. This is no small matter for India, as the UK alone accounts for 17 per cent of its services exports even as its share in India’s foreign trade is a modest 6 per cent with a slight surplus in India’s favour. While the UK is expected to reach out to India, it must be kept in mind that the latter accounts for less than 5 per cent of British merchandise trade, and its services imports. If China accounts for 12-13 per cent of the UK’s merchandise trade basket, the South-East Asian economies are prominent on the services side. India, too, has diversified its trade away from the Organisation for Economic Co-operation and Development (OECD) towards Asia and Africa.

Britain will seek to minimise damage to its trade and investment ties with the EU, even as it weans itself away from an open borders policy. The question, of course, is whether the EU will oblige Britain or squeeze it. The course of these talks may well have a huge bearing on world trade and investment flows — and indeed on how trade pacts are negotiated elsewhere.

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