Why you’d probably welcome a UK trade deal with India
UK Business Secretary Sajid Javid has been over in India discussing what a post BREXIT trade relationship with the country could look like.
After China, India is the 2nd most populous country in the world. With more than 50 million online shoppers and internet population that is set to surpass half a billion by 2018 India is one of the most exciting countries in the world from an ecommerce growth perspective.
The EU don’t currently have a trade agreement with India, although they’ve been talking about it for almost a decade. Since 2007 there have always been too many barriers with both sides stalling on agreements ranging from motors to dairy produce, from agricultural subsidies to booze tariffs. Either way a deal has yet to be done.
For Tamebay readers, the main interest is the pure ecommerce side of trade with India. Online sales in India are expected to reach $29bn by 2017 and will continue to grow reaching a staggering $100bn by 2021.
There have been a number of barriers to entry in India, both the rules for marketplace investment affecting companies such as Flipkart and Amazon, and the rules for merchants which pretty much means that you need to partner with an Indian based merchant of record. The Indian merchant buys from you and then sells under their own company on the Indian marketplace which is tiresome to set up and more complicated to manage then simply listing and selling directly on an Indian site yourself.
It’s early days, but if the UK can negotiate a bit more freedom for sellers in the UK to sell on Indian marketplaces then a deal between the UK and India would be something many would welcome. India would also be happy – something like 30% of Indian exports come to the UK so we’re an important customer to them too.
A fulfilment centre in India would be a big deal for UK sellers, because there is a huge middle class expanding market and the population is huge.
India could easily become a critical part of your sales, access for small sellers is a very major and important deal that I think is overlooked.
India could become a great opportunity and an FC would be a good idea.
i) would the suggested FC face the ‘local content’ problem that you say face amazon?
this problem goes back to the end of british rule – what substituted was a peculiar administered society – very much in the hands of interfering bureaucracy and political groups
it remains a minefield for direct business involvement
ii) for details on indian/uk trade cf indian high commission stats:
the %age of indian exports coming to the uk approximates 3 not the 30 in your article
so we are not important
There are some realities you need to be aware of when dealing with India. Firstly, the infrastructure is hopeless, so shipping, electricity, transportation, etc, means the cost of doing business is expensive and there are a multitude of things that can go wrong, some places are not even fully serviced by the post office or courier companies. Second the bureaucracy is impossible, you might wonder why very few Indians purchase from overseas despite a proficiency in English and a sizeable middle class, that’s because just to post a package there requires an airways bill and special invoices included with the package to avoid major customs delays and fees amounting to nearly the purchase price of the order, and that’s from a country which already has a free trade agreement (I won’t mention which one for my own privacy). Third, anything from the first world would be astronomically expensive compared to local products with practically no brand penetration, not to mention not at all adapted to local use. Fourth, unless you have an intimate understanding of India, it’s business environment and it’s culture, you’re extremely poorly equipped to do business there, especially if you can’t compete on price. Fifth, other countries have spend literally decades negotiating a trade deal with India, and even once signed will take years to come into full effect, so unless you don’t mind waiting ten or fifteen years you’re out of luck. Sixth, even if you wait for a free trade agreement with India (which may not even happen, remember, India is still rather sore about 89 years of colonial rule), it will almost certainly be on less favourable terms that the EU’s eventual trade agreement. The same can be said for China and other key markets.
Bottom line, just because Osborne is visiting India is meaningless, there is absolutely nothing to suggest this is a good thing. Brexit is the biggest disaster the UK will face in it’s post war history. If you’re smart you’ll relocate to Warsaw, Berlin or Madrid while you still can. At least the weather there’s better and you’ll have a chance at a free trade agreement before you retire.
I can remember back to the night after the Referendum. As the results rolled in and it became obvious that BREXIT was going to happen that the first thing that came into my mind was the importance of doing Trade Deals.
When we joined the Common Market all those years ago and as it morphed into the accursed EU we were forced to turn our backs on our historic friends and indeed Kith and Kin in the Commonwealth. Now we have regained our Independence we can start the long job of re- opening up Trade Agreements with our friends. Australia, New Zealand, Canada, South Africa; The Caribbean States, India, Pakistan, Bangladesh, Malaya, Singapore, Nigeria and the other African Nations etc.
All of these stood by the UK during World War 2 and we should have made these Nations the first target of our Negotiators on day i after Brexit. So I would not critisise any Government Minister who is out visiting and negotiating with our historic friends. However with any negotiation there is no guarantee of success.
But the Commonwealth Nations should be our first targets. After all we speak the same language as most of them,which we never did with the majority of the EU Nations.
If we are going to succeed in the Post Independence World we need to Trade. Not just with a corrupt and bureaucratic EU with a currency that is on its last legs but with the whole of the World. Free Trade will be a massive boost for not only the UK but the whole of the World.
We have heard all sorts of stories that the EU is going to ‘punish’ the UK for leaving the EU. But they sell us getting on for twice what we sell them. So if they put up Trade Barriers of whatever sort we can expect that the UK Government will put up similar Barriers to EU Exports to the UK. From that sort of madness the EU is going to be by far the greatest loser. especially if we are already increasing dramatically our Trade with the Commonwealth and indeed the rest of the World.
So if India is slow to join with us in Trade Deals we should not abandon them but get on with the rest of the Commonwealth Countries, America, and indeed the Rest of the World Nations and hope that India recognises the massive advantages that could exist for India if it put its time into sorting out their problems and then in a few years time join us in the massive benefits that each and every Country that works with us could achieve.
Chris T : Having actually lived in several Commonwealth countries I should let you know that they, especially the intelligentsia who’s intellectual and often actual ancestors fought Britain for their REAL independence, HATE Britain for it’s colonial rule and atrocities (the bloody details of which are required reading in most schools in former British colonies), and rightly so. They see the UK as a declining inward looking nation obsessed with our past and consider us as irrelevant. They are far more interested in dealing with the EU, Japan, China or the US, even Russia. There are very few people who harbour some romantic notions of Britain, but they’re not the ones who make trade deals.
Mind you these trade deals take years to negotiate and years to ratify, often with decade long transition periods. A good example is the trade deal Japan signed with India in 2011 (twenty years after India first liberalised its economy), it won’t be fully implemented until 2021. I don’t see India welcoming it’s former colonial master as it comes cap in hand seeking to make a trade deal.
It’s extremely arrogant to believe after the atrocities committed by the British in these countries that they would consider the UK anything other than a has-been imperial power, who still harbour people who pathetically think they can slink back into their affairs. They will treat us as all trade partners, something that can be used for their own ends, based on our ability to leverage our position. Outside the EU, that position becomes much weaker.
The EU is by far the world’s largest single market, especially for online sellers and brexit will destroy that for UK based sellers.
most countries were either ruled or fought with or were influenced by Britain in the last 300years they deal with Britain because they want to make money they dont give a bugger if my great great grandad wore a redcoat
dont forget The USA was once a British Colony,
shipped 3 times to india in 20 years of online trading
all 3 stolen or package returned empty
the empty package was accompanied by a telephone book of forms and official dribble
Sold twice to India through eBay two INR claims India now blocked I think I will give India a miss until the post service or the buyers honesty improves.