Britain seals the deal with India as new trade era begins
The Cable | No. 18.2025
Welcome to the 41st Cable, our weekly roundup of British foreign and defence policy.
This week will see the United Kingdom (UK) commemorate the 80th anniversary of Victory in Europe (VE) Day. The defeat of fascism in the Second World War and the reconstruction of Europe into a safe and prosperous continent are rightly seen as one of Britain’s greatest national achievements. However, the hard-won benefits of 1945 are increasingly coming under pressure. In recent years, we have seen the harbingers of a once-thought bygone era return: large-scale inter-state conflict in Europe, the rise of revisionist autocratic nations on the world stage and a more transactional and isolationist United States (US). Taken together, these show that the UK has entered a new age of geopolitical competition and that Britain, alongside its allies and partners, must once again stand up for the values of a free and open world.
Welcome back to The Cable!
New UK-India trade deal: A new era of relations for Britain and India?
Between April 29th and 30th, Jonathan Reynolds, Secretary of State for Business and Trade, welcomed Piyush Goyal, his Indian counterpart, to London for ‘an intensive two-day negotiating sprint’ to advance the Free Trade Agreement (FTA) between the two countries. On the back of this effort, the deal was signed by Sir Keir Starmer, Prime Minister, and Narendra Modi, Prime Minister of India, on 6th May, marking the largest FTA the UK has signed since Brexit.
According to His Majesty’s (HM) Government, the deal is expected to increase bilateral trade by £25.5 billion, UK Gross Domestic Product (GDP) by £4.8 billion and wages by £2.2 billion each year in the longer term. However, the details remain vague on critical issues, including immigration from India to Britain and carbon credit exemptions for Indian exports. This FTA could also bring additional benefits as, in recent years, India has enjoyed significant economic growth, leapfrogging the UK to become the fifth largest global economy as well as being expected to become the third largest by 2030. Likewise, as many nations aim to diversify their supply chains away from the People’s Republic of China (PRC), India is likely to be a significant benefactor of this so-called ‘friendshoring’ of industry, which could lead to cheaper goods for British consumers.
Outside the realm of economics, closer relations with India in a more contested geopolitical environment could be beneficial for Britain. In particular, India is often viewed to be a key partner in containing the rise of the PRC, with New Delhi already highly concerned about growing Chinese influence in the Indian Ocean. There are already strong signals of India shifting its defence strategy to meet this rising threat, with New Delhi rejoining the Quadrilateral Security Dialogue – alongside the US, Japan and Australia – in 2017, while bilateral defence relations with Britain have also grown over the last decade, with the UK-led Carrier Strike Group 2025 (CSG2025) set to visit India on its way to East Asia later this year.
Despite India being a member of the Commonwealth, attempts to deepen relations between the two major economies have been somewhat muted in recent years. However, the signing of the FTA could be a springboard for a wider strategic partnership. This could reinvigorate the 2030 Roadmap for India-UK Future Relations, which envisages deepening cooperation across a range of sectors, including defence, climate and health. With a concerted effort, HM Government could reap the benefits of a closer relationship with India.
Key diplomacy
Sir Keir spoke to a number of world leaders over the last week, the most important being:
On 4th May, Sir Keir rang Anthony Albanese, Prime Minister of Australia, to congratulate him on his victory in last week’s general election. The two discussed the ‘strong and enduring friendship’ between their two countries and reaffirmed their commitment to work closely together on shared security issues such as Ukraine and the AUKUS partnership.
On 5th May, the Prime Minister held a call with Emmanuel Macron, President of France. The two world leaders began by reflecting on the VE Day celebrations this week. They also called for Russia to commit to a 30-day ceasefire to ‘ensure meaningful peace talks.’ Sir Keir and Macron also discussed the upcoming UK-France summit due to take place later this year, which will focus on enhancing cooperation on defence and tackling irregular migration. Finally, they both expressed their ‘deep concern’ at the current conflict in Gaza and agreed a renewed peace process was required.
On 6th May, Sir Keir spoke with Modi. The pair celebrated the landmark UK-India Free Trade Agreement which was announced earlier that day. They also discussed last month’s terror attack in Jammu and Kashmir, with Sir Keir offering his ‘deep condolences…at the tragic and senseless loss of life.’ Finally, Modi invited Sir Keir to visit India in the near future.
Last week, Nick Thomas-Symonds, Minister for the Cabinet Office, hosted Maroš Šefčovič, European Union (EU) Commissioner for Trade and Economic Security, ahead of his first official visit to the UK under the Labour government. Prior to this meeting, it was announced that the UK will gain increased research and business access to the Horizon Europe programme, particularly in relation to quantum and space research. Horizon Europe is the world’s largest programme of research collaboration which builds on high-potential tech areas such as artificial intelligence (AI), telecoms and high-performance computing.
Defence
Sir Stephen Lovegrove, Britain’s special representative for the AUKUS defence partnership, travelled to Washington last week to brief American officials about a review of the project he presented to HM Government earlier this year. Sir Stephen was the UK’s National Security Adviser when AUKUS was formed in 2021. Last year, he was commissioned to review Britain’s progress towards meeting its core commitments under the project and identify barriers to success.
The Royal Air Force (RAF) has received hundreds of new ‘cutting edge’ drones, known as ‘StormShroud’. These drones, produced in the UK by Tekever (a Portuguese defence company) provide new capabilities for the RAF, using signal jammers to disrupt enemy radar at long range, helping to protect aircraft and pilots. StormShroud is the first of a family of next-generation drones – known as Autonomous Collaborative Platforms (ACPs) – being delivered to the RAF.
On 30th April, John Healey, Secretary of State for Defence, gave a statement in Parliament on the recent air strikes against a Houthi military facility in Yemen. He said that intelligence had identified a cluster of buildings being used by the Houthis to manufacture drones used to attack shipping in the Red Sea, and that the UK acted in ‘collective self-defence to uphold freedom of navigation, as Britain has always done.’ This was the first UK strike on Houthi forces since the new US administration came to office in January.
Between 5th and 11th May, CSG2025 is taking part in Exercise MED STRIKE in the Ionian Sea with other North Atlantic Treaty Organisation (NATO) nations. The exercise will see 21 warships – including two aircraft carriers, the Royal Navy’s HMS Prince of Wales and Italy’s Cavour – three submarines, more than 60 aircraft and over 8,000 personnel. The operation is focused on a wide range of joining operations, including anti-submarine warfare, carrier strike integration and air defence in congested combat environments.
Environment and climate
The Climate Change Committee (CCC) recently published a new report criticising HM Government for making ‘very little progress’ in preparing the UK for the growing impacts of climate change. The report highlights, in particular, the risk of flooding and extreme heat to Britain’s agricultural sector, homes and critical infrastructure. The authors also state that heat-related deaths could exceed 10,000 in an average year by 2050 and estimates that ‘unchecked climate change’ could cut up to 7% of GDP by 2050.
HM Government is set to announce a new policy which will require by law that the vast majority of new homes have solar panels installed during construction by 2027. Analysis by The Times states that this policy will increase construction costs by between £3,000-£4,000 per home, but that residents would recoup these costs within four years, as the average home would save more than £1,000 annually on energy bills.
How Britain is seen overseas
The International Institute for Strategic Studies (IISS) published an article arguing that establishing a European nuclear deterrent in response to concerns over US commitment to NATO would not be a straightforward solution to Europe’s security challenges. The author highlights several key obstacles to the development of a so-called ‘Euro-deterrent’. These are technical and financial challenges, political divisions and the lack of a chain of command within Europe, and the risk that a fragmented nuclear strategy could undermine NATO’s cohesion. Therefore, the article recommends that rather than developing a nuclear deterrent, Europe should strengthen its conventional forces and enhance NATO’s existing nuclear sharing arrangements.
Responsible Statecraft, an online magazine part of the Quincy Institute, published a confused opinion piece declaring that the Royal Navy has been ‘reduced to a small regional naval power, able occasionally to deploy further afield.’ It states that ‘almost half of Britain’s fighting ships’ – which includes only four vessels – are taking part in the CSG2025 deployment to the Indo-Pacific. The latter half of the article focuses on the claim that Russia is engaged in a significant naval buildup, constructing more than 50 vessels since 2011, while the Royal Navy continues to shrink due to budget cuts. The author concludes by saying that the world now contains ‘just three global naval powers: the US, the PRC and Russia.’ While this take does raise some pressing issues, such as shrinking budgets and stretching resources, it falls into fantasy when describing the size and role of the Royal Navy while deeply inflating the strength of the Russian Navy, whose only aircraft carrier is rarely seaworthy.
How competitors frame Britain
Russia Today reported on an interview with Maria Zakharova, Spokesperson for the Russian Foreign Ministry, who attacked ‘British egoism’, which she claimed has been ‘elevated to national ideology’. Zakharova went on to claim that the UK ‘...constantly needs resources. Britain constantly needs to rob, to steal and preferably to kill, leaving no witnesses…That is why those neo-Nazis [Ukrainian military personnel who took part in VE Day celebrations over the weekend] marched in London streets.’ You can play Russian propaganda bingo with this statement. Likewise, the Russian state seems to have forgotten that it is stealing the resources from illegally-occupied Ukraine.
How Britain thinks about foreign affairs
The theme of this year’s London Defence Conference will be ‘Allies’, so in the spirit of this theme, this week’s Leckie will look at how the UK views alliances. The way in which British decision makers have viewed alliances has shifted over time. The famous Lord Palmerston quote – ‘We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow’ – has long since fallen out of favour. In today’s environment, British views on alliances can be split into four camps.
Allies as an end: Adherents of this viewpoint exhort the importance of forging deeper ties with allies without much explanation as to why or what for. Alliances are seen as an inherent good; the more Britain has, and the deeper they are, the better. They believe efforts should be focused on broadening and deepening alliances, often even where this may result in clashes with UK interests.
Allies as a means: This camp is the evolution of the Palmerstonian tradition, albeit far less extreme. They see carefully curated alliances as a way for Britain to catalyse its powerbase and pursue bolder ambitions than it would be able to achieve alone, or to pursue its interests more efficiently. Where national interest may run against a deeper alliance with any particular country, this camp would view the risk of tension with said ally as worth running.
Allies as a lead: This viewpoint brings together a collection of those who either believe the UK is too powerless to do much on the international stage, or who do not want to take risks in establishing leadership on key issues. It is far easier simply to follow the lead of others; most often either the US or the EU.
Allies as a burden: By far the smallest camp, this viewpoint brings together a motley collection of those with isolationist tendencies and those who view Britain and its allies as bad actors. They would have the UK walk away from its network of alliances to avoid what are perceived as either expensive or imperialistic commitments.
The two largest groups in the post-Cold War era are those who view allies as an end and those who view allies as a lead. However, as the geopolitical environment worsens, allies are increasingly being seen once more as a means.
This section is named after Gould Francis Leckie, author of An Historical Survey of the Foreign Affairs of Great Britain (1810) – the first modern geopolitical text.
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