Stubborn May Taught Hard Trade Lessons in India

This article first appeared on the Riding the Elephant site.

Britain's Prime Minister Theresa May has discovered in India during her first bilateral visit outside Europe that she runs into the same blockages over free trade and movement of labor internationally as she does in her post-Brexit discussions with the European Union.

The lesson, which is highly significant for Britain as it prepares to leave the European Union, is that she can't run a strict visa regime at the same time as expecting open doors for goods and services.

She has been told this repeatedly in the EU, and now she has heard it in Asia from a country with which the U.K. has strong though complicated ties—a book published at the weekend, An Era of Darkness, recounts how, as a colonial ruler, Britain crippled the Indian economy and self esteem.

May arrived in unhealthily smog-ridden New Delhi late on Sunday night and began her meetings yesterday morning at the opening of an India-U.K. "tech summit," followed by meetings with Narendra Modi, the prime minister. Later there was a press conference, with no questions, and an almost embarrassingly brief appearance at an evening reception hosted by the British high commissioner.

It rapidly became clear that May still behaves as if she had her old job as Home Secretary, blocking visas for students and for professionals such as information technology workers. She is prepared to make some improvements in the visa process, but not to the substance of regulations.

She did not show the charm or personal touch in her rigid Brexit persona on what was, she said, her "first ever trade mission," so totally failed to win support for the pitch that Britain is "open for trade" but not for immigrants, as she is doing in Europe.

Modi was no doubt pleased that May had chosen India for her first visit outside Europe and talked about the two countries' "truly special" relationship. But he will have realised that there was not much competition since the U.S. is embroiled in its presidential election, and May would not have wanted to be seen to be following her predecessor David Cameron's kow-towing by choosing China.

Cameron made three visits to India as prime minister and charmed people to a degree that May did not even attempt, though he overplayed his hand and achieved little.

He said after he became prime minister in 2010 that he would double bilateral trade with India within five years, but it actually fell from $15.7bn in 2011-2012 to $14bn in 2015-2016, despite India's strong economic growth.

He promised to ease student and business visas, but was thwarted by May at the Home Office. The number of Indian students going to U.K. universities halved from 39,090 in 2010/11 to 19,750 in 2013/14 as regulations were tightened, including restrictions that prevented graduates staying on in the U.K. for two years.

May said that she had as Home Secretary eased visa processes for Indians, and she announced concessions on businessmen's visas including one under a "Registered Traveller Scheme". This will ease passage for a lucky few through the EU immigration queues at British airports.

The day before she flew to India, however, her government announced new restrictions on professionals' visas, raising the minimum salaries required for company transfers from £20,000 a year to £30,000 ($24,800 to $37,200), which will restrict technology staff transfers that can be done by companies such as Infosys and Tata.

She also took a tough line saying, "The U.K. will consider further improvements to our visa offer if, at the same time, we can step up the speed and volume of returns of Indians with no right to remain." Indian officials responded saying they could take those who had rights to live in India, but not everyone on the British list.

May didn't even mention students or education in her opening speech, but Modi made it clear that this was essential.

"Education is vital for our students and will define our engagement in a shared future," he said in his speech. "We must therefore encourage greater mobility and participation of young people in education and research opportunities."

Sir Keith Burnett, vice chancellor of Sheffield University, who is in Delhi, put his profession's view in a Reuters article, asking, "How can we say 'free trade' and not be willing to teach their children even as they help make our universities economically viable? What has led us to this madness?"

May's main pitch was quickly to negotiate a free trade deal with India once Britain is clear of the EU, and to boost trade and investment in the meantime. A "working group" is being set up to handle such issues, and investments totalling over £1 billion ($1.24 billion) were announced, though only a few results materialised from previous billions announced on Cameron's visits and when Modi was in London last November.

The need for free movement of labor as well as trade dominates debate however. Amitabh Kant, a close Modi adviser and chief executive of the government's Niti Aayog economic think tank, told the conference that, while India was opening up its manufacturing and defense sectors to foreign investors, its professionals faced restrictions on working in Britain and other Western countries.

"There is no such thing as selective free trade," he said. There was a need for free trade in cross-border movement of manpower as well and the U.K. should allow meritorious people from India to work in the U.K.

On other issues there was more of a meeting of minds. Talks between the two sides ran on for three hours instead of the planned two, and reports said that Modi and May had a 90 minute meeting without officials. No doubt they recognized each other's political limitations, and they agreed on a range of issues such as combating terror, investments (both are major investors in each other's businesses), energy, and successful cooperation on science and technology.

May has traveled on today to Bangalore to see a British tech investment and meet more people. She flies back to the U.K. after a visit of just under two days.

Officials are making the best of what was achieved. At a media briefing, I asked a senior Indian diplomat if his positive presentation of what had been achieved meant that May had changed from when she was Home Secretary, and whether enough had been offered by the U.K.

"Changes in life are always incremental', he replied with a smile, quickly moving on to details.

The problem with Britain's new stubborn prime minister however is that she doesn't show much inclination to change, even incrementally, whether she's in London, Brussels or New Delhi.

John Elliott writes from New Delhi. His latest book is IMPLOSION: India's Tryst With Reality (HarperCollins, India).