A big bloc of Conservative politicians backed Brexit because they thought Britain could become stronger by swapping sclerotic Europe for a deeper relationship with rising Asia, India in particular.
The idea that independence from Europe would let Britain build better relations with the subcontinent was one of the positive stories that leave campaigners told. After all, Britain had a strong trading links with India once, didn’t it? We should be careful.
The history of Britain’s connection with India tells us there is no point having the right to sign trade deals if people don’t want or don’t have anything to trade. What matters is the practical relationship between two societies, not sovereignty. In fact, independence has been an obstacle, not a boon.
About 350 years ago, the English East India Company had the prospect of good trade with India, as the country’s growing production of sophisticated textiles was met by increasing European demand.
But a big expansion in trade would have needed British merchants to play within the rules of India’s version of the European Union, the Mughal empire. Wanting to maintain their independence, they didn’t. Britain’s effort to negotiate fixed trade deals as an independent state created tension, sometimes war, and limited the benefits gained by each society.
As Britain’s power spread through the Indian subcontinent in the 1700s, profits declined. In the 1800s, Britain industrialised but British rule prevented the development of Indian industry, and India became poorer. Britain sold India low-priced goods, particularly textiles made in Lancashire’s cotton factories. In1913, India was briefly the biggest buyer of British-made goods. But if India had been able to develop its own economy, it might have bought more. In fact, the terms of trade got worse.
The ill will created by decades of conflict and imperial domination led Indian politicians to demand their own industries be supported, and the chaos-ridden British state was always looking to earn more cash. From 1894, there was a five per cent tax on British imports to India. By 1930, people in India buying British goods were paying 15 per cent of the price to the government. Lancashire cotton was one of the first British industries to decline. The failure to create a mutually beneficial trading relationship with India was one reason it did.
Britain was independent throughout these years; it was also the world’s greatest power by far. The UK could negotiate whatever trade deal it liked. Yet, with a poor practical relationship with India’s merchants and consumers, sovereignty and global domination didn’t help the terms of trade with the subcontinent. In practice, it isn’t sovereignty, but the practical relationship between two societies that shapes trade.
One legacy of empire is that Britain has greatly benefitted from migration from south Asia. Another is that Britain has had poor trading connections with the subcontinent ever since independence. The disparity between the two is extraordinary. India provides by far the largest number of doctors in the NHS. But Britain is only 22nd on the list of countries exporting to India.
After 1947, those few British businesses which stayed in the subcontinent carried over the old mentality, and assumed they could dominate India without a mutual relationship. Anxiety about foreign influence meant, then, that India blocked foreign trade for a generation.
By the time India opened up again in the 1990s, Britain was remembered more as the old imperial authority, not a possible trading partner.
Now, European Union members without an imperial past sell more to India. Germany tops the list, with almost three times as much trade as the UK. France sells far more manufactured goods. Even Belgium does better. And most of Britain’s exports are in areas which provide little employment in the UK – Britain’s trade figures benefit from the sale of oil and from having the world’s largest gold market, but these sectors don’t create many jobs.
Britain’s leaders assume the old connections, our large south Asian population and a few flashy trade delegations will set us on a better path. In fact, it takes the long hard work of business people building relationships, industry by industry, and town by town. That’s one reason for Germany’s success. Manufacturers need to understand Indian retailers and consumers, the suppliers of services need to get to grips with the people they would work with.
It isn’t about sovereignty, the rules negotiated between themselves, or flashy trade delegations. Nor can we rely only on the UK’s south Asian population. Trading only with places where Britons have ancestral connections would mean we miss some of the fastest-growing regions of the country – much of India’s south, for example.
Instead, what counts is the work of British business getting to know their counterparts in the subcontinent on an equal footing, face-to-face, over long periods of time. That’s what sovereignty, empire and glitzy delegations now don’t allow. But to improve our embarrassingly weak trading relationship with India, we need to start doing it now.
Jon Wilson is the author of India Conquered: Britain’s Raj and the Chaos of Empire, published by Simon and Schuster. He teaches history at King’s College London.