The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)

My Lords, I am pleased to respond for the Government. I am grateful to my noble and learned friend Lord Goldsmith and the International Agreements Committee for securing the debate today. I am pleased to echo the comments made about my noble and learned friend’s exemplary work as chair of the IAC. I also acknowledge the important work that went into the considered, robust recommendations of this report and the many comments that have encouraged the quality of that work by the team here today. I begin my remarks by advising noble Lords, having spoken with the officials who negotiated this agreement, that now that they are leading its entry into force the focus has decisively shifted from signing to delivery, and that work is progressing apace. With that in mind, I should like to talk about why the deal discussed today is so important, and, more broadly, why the UK-India economic and trade relationship is so valuable, as many noble Lords have mentioned. The UK did £47.2 billion in trade with India in the past year. That was up 15%, year on year, and India is now our 11th-largest trading partner. However, as many noble Lords mentioned, it is India’s future potential as an economic partner 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 and, by 2050, it 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 FDI into India continues on its recent trajectory, it could grow to be worth £1 trillion by 2033. Noble Lords will understand why this has a particular resonance for me as the Minister for Investment. I thank the noble Lord, Lord Kerr, for referencing investment, and express my delight that investment sentiment has already increased since the deal was signed. However, the opportunity runs far deeper than statistics. The United Kingdom and India share a unique historic relationship that many noble Lords have referenced—one built not only on institutions and commerce but on people, ideas and innovation. The Indian diaspora, as my noble friend Lady Gill mentioned, is one of the UK’s greatest strengths. It is a true living bridge that shapes our economy, public services and universities, and the character of modern Britain. Despite the strength of that relationship India’s market, as my noble and learned friend Lord Goldsmith rightly noted in his opening remarks, is also behind some of the highest barriers to trade in the world. In 2024, India was ranked by the OECD as the eighth most restricted service market and it has some of the highest tariff rates in the G20. Gin and whisky tariffs are at 150%, cars 110%, cosmetics 22%, and soft drinks, lamb, fish, chocolate and biscuits are all at 33%. That sounds like a menu in the Stockwood household, but I wanted to quote some of those tariffs. It is worth noting that India’s protectionism is not just a matter of policy; it runs deep in its national story. At independence, the burning of foreign cloth became a symbol of economic self-determination. So, when India agrees a deal of this depth, it is not just a small adjustment; it is a significant shift marking progress in the relationship between our two countries. It is in this context that the agreement secured by this Government should be viewed as a momentous achievement. Others had been trying to get a deal like this one for years and failed, but this Prime Minister, along with the then Business Secretary and Trade Minister, has literally brought home the goods. The agreement goes well beyond India’s precedent, opening the door for UK businesses. The Commons Business and Trade Select Committee said in its report that this deal “is the UK’s most economically significant bilateral free trade agreement since leaving the European Union”. It will boost UK GDP by £4.8 billion—approximately 0.13%—and wages by £2.2 billion and is predicted to boost bilateral trade by £25.5 billion by 2040. For those who says that 0.13% sounds modest, I simply ask: what other single, practical step on the table today could bring the same level of economic development? I ask noble Lords to bear with me for a second as I have lost my place; as a technology entrepreneur trying to use technology, the irony here is not lost on me. India will drop tariffs on 90% of its lines, covering 92% of current UK exports, giving the UK tariff savings of £400 million per year immediately on entry into force. This will rise to £900 million per year 10 years from now, even if there is no increase in trade. India’s average tariff will fall from 15% to 3%. Further, I emphasise that every region and nation will benefit from this deal, including a £210 million boost for the north-west, driven by aerospace and automotive wins, a £190 million boost for Scotland, supported by cuts on whisky and satellite tariffs, as well as financial services access, a £190 million boost for the east of England, generated through tariff cuts and improved rules for medical devices and clean energy products and a £50 million boost for Northern Ireland, supported by a reduction in the tariffs on industrial products for aerospace, medical technologies and electronics. Of course, the deal will deliver these benefits only if it is used by UK businesses. This point was made by many noble Lords. We know that it will not always be plain sailing, thanks to varying rules in different states and provinces. The staging of tariff liberalisation will need some explaining, and non-tariff barriers can be just as important. This was alluded to by my noble friend Lord Sikka. That is why we are matching the agreement with practical export support, including stepped-up advice in market and the full range of UK Export Finance backing, so that firms—especially SMEs, which were mentioned—can turn preferential access into signed contracts. I saw this at first hand during the trade visit with the Prime Minister in October, when we took a number of businesses—120 CEOs—to India. Two deals that had not been made previously were struck in negotiations during that week. A noble Lord committed on the impact on climate. One of those deals was on accessing technologies in the UK that could accelerate the climate transition for India. Our department is committed to ensuring that businesses have all the support they need, which is why we have protected the DBT team in India. It is also why we have already engaged with more than 5,000 UK businesses through guidance, events and roadshows on how to exploit the CETA. Once we get to entry into force, we will monitor the operation of the CETA’s provisions, including through the regular reviews and the Joint Economic and Trade Committee—the JETCO —that are built into the agreement. We will also try to resolve other market access barriers that are not covered in this FTA—many of them have been mentioned today—including legal services, recognition of qualifications and specific state-level barriers. The UK is clearly open to continuing negotiations on a bilateral investment treaty, as long as it works for UK businesses. As many noble Lords have said, this is the floor, not the ceiling. We will keep improving how the agreement works based on real feedback from UK firms. This negotiation has never been about just the economic uplift that it delivers, substantial and important though that is. At a time when our global norms are under pressure, the UK is choosing to lead and to stand for open, fair and rules-based international trade. Agreements such as this are how we build resilience and prosperity for not just ourselves but our partners. This is how we build trusted economic relationships in a world that is changing fast, as evidenced by the past week’s circumstances. The world is not the same as it was a decade ago—in fact, it is not the same as it was last week. In this new global order, strong bilateral partnerships that are rooted in shared interests and delivered through serious, detailed agreements are how we secure our long-term position. This is a proper, thorough, detailed, old-fashioned treaty. It has hundreds of pages—as we saw on the desk of the noble Lord, Lord Hunt, earlier today—with commitments negotiated line by line. It is real, serious work that shows that the UK is a credible partner on the world stage. It reflects this Labour Government’s approach more broadly: being committed to the hard graft needed to get these deals done. As previously mentioned, this deal is more about shaping the standards of the future, building trusted economic relationships and ensuring that countries that believe in openness and fair competition can work together. We have secured India’s first ever chapters on anti-corruption, consumer protections, labour rights, gender and development. The agreement also includes the strongest environmental commitments that India has ever made in an FTA. As the noble Baroness, Lady Bennett, referenced in her remarks, this is the start of a conversation, and we need to go further. I also take this opportunity to flag that the deal was negotiated by two formidable female chief negotiators, Kate Thornley and Nidhi Tripathi, showing both side’s commitment to putting women at the top table. In response to my noble friend Lord Sikka’s points on corruption, the deal includes an anti-corruption chapter that has obligations to maintain measures on the criminalisation of bribery and prohibiting fraudulent book-keeping practices; the prohibition of facilitation payments; the criminalisation of embezzlement and money laundering; and whistleblowing protections—all things that we take incredibly seriously. In drawing attention to these crucial social chapters, I am keen to emphasise the importance of these agreements in strengthening real partnerships between nations and facilitating important, frank conversation in matters beyond the economic things set out in an agreement. Turning to the European Union, we understand that it has now reached a political agreement on its own FTA with India, as many noble Lords have mentioned, where it seems that the UK deal was used as a baseline. We should in fact take this as a massive compliment, and we will be going through that agreement line by line to check the mark-ups later on. Crucially, the UK retains a first-mover advantage. I am hopeful that the deal will enter into force before the end of spring so that UK businesses can start exploiting these reduced tariffs this year, while the EU will take some time to achieve ratification. Only the UK has secured access to India’s £38 billion federal procurement market, as the noble Lord, Lord Frost, rightly acknowledged. I repeat that for impact: we are the only country in the world to secure that access. This is undeniably significant and a huge opportunity to a market that is growing at the rate India is growing.