By Jenny Gross
LONDON--U.K. Prime Minister Theresa May is traveling to India on Sunday to make the case for strengthening economic ties with the world's fastest-growing major economy, her first trip focused on expanding trade post-Brexit.
But as she seeks to lay the foundations for a trade deal during the two-day trip, she will likely have to grapple with the government of Prime Minister Narendra Modi's demands regarding immigration--an issue at the heart of Britons' decision to leave the European Union.
As Britain maps out its plans to extricate itself from the bloc, backers of its exit argue the country has plenty of other trade options and will have the flexibility to hammer out deals quickly. Because of its historic ties to Britain and rapidly growing economy, India is seen as a key opportunity.
A U.K. official said Mrs. May wants to establish a dialogue with her Indian counterpart to explore a more ambitious trading relationship once the U.K. leaves the EU. At a technology summit in New Delhi on Monday, she will speak to entrepreneurs and business leaders from both countries about the potential for increased cooperation.
"This is a partnership about our shared security and shared prosperity. It is a partnership of potential," Mrs. May said ahead of the trip. "And on this visit I intend to harness that potential, rebooting an age-old relationship in this age of opportunity and with that helping to build a better Britain."
In exchange for any trade deal, the Indian government is expected to demand relaxed restrictions on visas for Indians who want to work and study in the U.K. That would be a huge concession for Mrs. May, who has approached upcoming exit talks with the EU with a pledge to cut immigration drastically.
Vikas Swarup, a spokesman for the Indian government, said New Delhi had raised concerns about the difficulties faced by Indians wanting to study in the U.K., and that he expects the issues will be raised during Mrs. May's visit.
The U.K. official said the issue may come up in a bilateral meeting with Mr. Modi and that the country has been clear about its approach to immigration.
"We want to attract the brightest and the best, while doing more to control migration and bringing it down to sustainable levels," the official said.
"Whenever there's any discussion between the U.K. and India, the first thing the India wants is more visa access. And we say 'no,'" said Gareth Price, a senior research fellow at Chatham House, an independent policy institute based in London.
Vince Cable, a former government minister from the EU-friendly Liberal Democrat party who was involved in long-running, stalled trade talks between the EU and India, said the U.K. was one of the major stumbling blocks. Mrs. May, who was home secretary at the time, was instrumental in pushing the U.K. line that it wouldn't make it easier for Indians to work in Britain. Another obstacle was reluctance from both the EU and India to reduce barriers to their agricultural markets.
"Given her position on immigration is even harder now than it was before, it's impossible to see how we can get an agreement with India which is remotely attractive," Mr. Cable said.
India's caution toward international trade mirrors a similar trend around the world, including in the U.S., where both presidential candidates have expressed skepticism. India has lagged behind its neighbors in lowering barriers to international trade, and in 2014, it threatened to derail a World Trade Organization dealthat would simplify global customs procedures.
Any free-trade deal with India would take years to implement, and the U.K. can't finalize any deals until it leaves the EU, which is on course to happen in 2019.
Anand Menon, European politics professors at King's College London, said India will want to wait and see how the U.K.'s trade negotiations with the EU play out before getting into detailed negotiations. Indian companies--the third-largest source of foreign direct investment into the U.K.--have used investments in the U.K. as a jumping off point to the European market.
"It would be naive to think anyone would finalize a deal with us until they know what it means for their ability to use us as a base to reach the European market," Mr. Menon said.
Niharika Mandhana in New Delhi contributed to this article.
Write to Jenny Gross at firstname.lastname@example.org
(END) Dow Jones Newswires
November 06, 2016 01:14 ET (05:14 GMT)
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