UK Business Secretary Sajid Javid held talks with Indian Commerce and Industry Minister Nirmala Sitharaman to discuss ways to strengthen trade and economic ties between the two countries in the aftermath of Britain’s exit from the European Union (EU).
Javid was in India to launch initial discussions to establish new trade deals with individual countries. These bilateral deals will replace agreements the EU has had with more than 50 countries. “Following the referendum result, my absolute priority is making sure the UK has the tools it needs to continue to compete on the global stage,” said Javid.
The talks held on Friday, were not very detailed but were conducted in a bid to provide an early platform for future negotiations. Javid said he would use the discussions to outline the government’s “vision for what the UK’s future trade relationship might look like”.
While visiting India, Javid also met Tata Group chairman Cyrus Mistry to discuss the future of Tata Steel’s UK business, which the company announced to sell in March this year. The company has been trying to sell its UK business, but a recovery in steel prices and the pound’s global fall post the Brexit referendum may slow down the sale process or the company may even reconsider the sale after deeply assessing Brexit impacts.
Ishaat Hussain, a director on board Tata Steel said: “It’s (sale) a long process and a lengthy process. It will take time. It’s not a binary process. You look at the current global business situation. It does have an impact on all business decisions. The process is on. We are exploring all possibilities.”
Tata announced in March that it plans to sell its UK steel operation, a business it bought in 2007, putting 11,000 jobs at risk, including 4,000 at the strip products business in Port Talbot, South Wales. Cheap Chinese import, depressed price of steel and high energy costs were the reasons the company cited for the sale decision.
Also, the company had inherited a large pension deficit of $900-million when it acquired the erstwhile Corus in 2007, which was also the reason for its slow sale process. But post the EU referendum all aspects are being reconsidered and the company is showing no urgency to sell the business.
The company has also received a commitment from the British government to acquire 25 percent stake in Tata Steel UK, as a bid to support the company and save around 4,000 jobs. The vote to leave the EU could likely invite trade restrictions on Britain and on businesses based there. Since most of Tata Steel UK’s business caters to the whole of Europe from Britain, it is likely to change the valuations of Tata Steel UK.
The UK was the third largest investor in India between April 2000 and September 2015, while Indian investment is also hugely important to the UK. Foreign direct investment from India created 7,730 jobs between 2014 and 2015, according to the Department for Business, Innovation and Skills, while bilateral trade between the two countries was 16.5 billion pounds last year.
Javid’s visit to India comes after British official George Osborne met a Chinese government delegation in London on Thursday to foster stronger trade ties. British officials will also kick off visits to the US, China, Japan and South Korea over the next few months, in a bid to refashion the UK’s trade ties and reduce Brexit impact on its economy.
The British Foreign Secretary, Philip Hammond, said earlier in the week that the UK had a shortage of trade negotiators and may need to hire staff from abroad to get the necessary expertise to address this shortage of trade negotiators capable of forging closer economic ties to dozens of other countries.