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British PM Theresa May in India for state visit; trade, defense ties in focus

British Prime Minister Theresa May has been on a charm offensive to gain support for the U.K. ahead of formal Brexit negotiations next year. Having visited Western Europe, May is now turning her focus to emerging economies, with India as her first stop.

Accompanied by a business delegation from across the U.K., the 60-year-old arrived in New Delhi on Sunday in her first bilateral visit outside Europe as PM. As one of Asia's fastest-growing economies and a former U.K. colony, India is of paramount interest to a post-Brexit Britain.

"The prime minister will deliver on her ambitious vision for Britain after Brexit," a press release on the website of the prime minister's office stated Sunday. "A number of commercial deals are expected to be signed during the visit, creating and securing jobs at home and demonstrating market confidence in the strength of the British economy."

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India was the third-largest source of foreign direct investment into the U.K. last year, after the U.S. and France, and May will do all she can on her three-day trip to ensure this continues, said Narayan Iyer, India head at global law firm Linklaters.

"The British PM will want to show how the U.K. will capitalize on the economic and diplomatic opportunities outside of Europe. She will be keen to send a strong message that the U.K. remains an advocate for free trade and is open for business," he continued.

May's visit touches on a key argument of Brexit supporters. The "leave" campaign had long argued EU bureaucracy was hurting economic relations with emerging economies, and that the U.K. would be able to negotiate new trade deals on its own. Hopes for an India-E.U. free trade agreement (FTA)—in the works for nearly a decade—are low so New Delhi would welcome a FTA with the U.K, Iyer noted.

Defense may be another key sector to watch. India, one of the world's biggest arms importers, mostly buys from the U.S. and Russia, so strategists widely anticipate May to push the case for U.K. weapons instead.

However, no concrete deals will be inked on this visit as agreements can only be signed once the U.K. formally leaves the E.U., pointed out Dhruva Jaishankar, foreign policy fellow at Brookings India.

A strategic visit

Trade and business aside, there may be geopolitical motives behind May's trip.

India is the only major non-European country willing and able to host her at this time, explained Kanti Bajpai, Wilmar professor in Asian studies at the National University of Singapore. Washington is caught up in a tumultuous presidential election and U.K.-China relations are presently rocky, so New Delhi was the best choice, he continued.

Chinese state media accused Britain of "China-phobia" in August after May's government delayed a deal involving mainland companies to build a $21.9 billion nuclear power plant in Somerset, amid national security concerns. The deal was finally signed in September.

Because the U.K. does not have any major quarrels with Prime Minister Narendra Modi's administration, an India trip is politically safe and gives her an opportunity to bolster her international reputation, said Bajpai.

Will India reciprocate?

However, it may not be easy for the U.K. to deepen bilateral ties because India has its own economic, political, and other domestic considerations, Nikita Sud, associate professor of development studies at the University of Oxford, wrote in a recent blogpost on the London School of Economics website.

The ease of obtaining visas is an especially big concern for the South Asian country. For years, India was Britain's largest immigrant group—a title it lost in August after statistics showed Poles took first place for the time. But given that anti-immigration sentiment played a key role in the Brexit vote, visa rules for foreign nationals may not improve.

In April, the U.K. said that non-EU workers looking to live in the U.K. for longer than six years would be required to earn at least 35,000 pounds ($43,600) a year—up from 21,000 pounds—barring certain exceptions. And Modi has already warned that the new regulations could have a negative impact on Indians.

"This is a very tricky issue for May to navigate. Being seen as more accommodating of visas to Indians will invite criticism in the U.K. But being seen as intransigent on the matter will not go over well in India," stated Jaishankar.

Moreover, Indian corporates may not be as gung-ho on investing in Britain as they were in the past.

Britain, home to more than 800 major Indian-owned businesses that employ 110,000 people and have a combined turnover of 26 billion pounds ($31 billion), had been an attractive investment destination because it was a launchpad to other E.U. countries, Sud explained.

"Now that the entry point might be restricted, or even closed, Indian-owned companies in the UK will have to rethink their business models. Jaguar Land Rover, for example, has said that it will realign its thinking on U.K. investment, as has steel company Tata."

On the flip-side, many strategists have noted that the falling pound—down more than 15 percent against the greenback this year—could make investments in Britain more appealing for foreign companies.

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