The Renaissance of India’s Golden Road

From c. 250 BC to 1200 AD, India shaped society in the ancient world. At one point, it was the epicentre of Eurasia, leading author and historian William Dalrymple to refer to India’s transformation of the area as the ‘Indosphere’.

The Silk Road connected the Far East and Europe, with India as a crucial intermediary, creating what Dalymple terms the Golden Road. However, the Haycalon era of the Golden Road was soon to come to an end, which was punctuated by the interwar years.

In the 60s, India adopted a policy of import substitution to become a self relient nation, causing India’s GDP to shrink from 10% in 1958 to 4% in 1970, whilst the strategy removed the pressures of competition for internal producers,  India’s Asian competitors Taiwan, south Korea and Singapore seized opportunity shifting to an export strategy seeing favourable growth rates of 10% meanwhile, India’s insular strategy also denied them access to world class technologies, meaning that India lost its competitiveness.

Tighter import controls led to further restricted growth and stagnation, from 1951-1981, growth plateaued at 1.5%, in 1991, in crisis, India removed many of its import controls and allowed the Rupee to lose value, supporting exporters and its producers who were competing with global traders, licensing of which ended in 2001 after the WTO ruled against it.

The impact was seismic from 2002–03 and 2011–12. Indian exports soared from $75bn to over $400bn. India’s per capita income grew more in the first 17 years of the 21st Century than it did throughout the entire 20th Century. ITrade liberalisation in India was reversed twice – in 1996–97 and again since 2018 – with extensive use of anti-dumping measures to block imports from the most competitive sources, according to Prof Panagariya.

Steeped in a background of post-colonial history, India harboured a deep-rooted suspicion that international trade is colonisation in a new guise, says Vivek Dehejia, a professor of economics at Carleton University in Canada. Many argue that such protectionist policies have damaged the Prime Minister’s Make in India initiative, which focused on capital and technology-intensive sectors while sidelining labour-intensive industries like textiles.

The introduction of the most recent trade tariffs has put international trade with China at a significant disadvantage. It may have expedited the urgency to sign the recent GB-India Trade deal. Opportunities exist for the garment, textile, and toy industries. Still, the question remains: Will India be able to meet a surge in supply and demand quickly enough?

This is particularly crucial, given a drop in US trade of up to $7.76 billion—a 6.4% decline in exports to the US this year, according to an estimate by the Global Trade Research Initiative (GTRI), a Delhi-based think tank focused on the Indian economy. Will trade-shy India gain the edge in a tariff-driven slowdown? – BBC News

The new agreement is expected to increase bilateral trade between the countries by $34 billion a year from 2040. Tariffs on whisky and gin will be halved from 150% to 75%, falling, and India will also cut automotive tariffs from over 100% to 10%.

Other Indian tariffs cut under the FTA include those on imported British cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits. In turn, the U.K. has cut tariffs on clothes, footwear, and some food products — including, the government is keen to note, frozen prawns. Based on data from 2022, India’s tariff cuts will amount to over $534 million, according to Reuters. This is expected to more than double after 10 years.

Cuts to Britain’s own tariffs mean that 99% of British Indian imports will be duty-free. In 2024, India was the UK’s 11th largest trading partner, accounting for 2.4% of total UK trade, and total trade in goods and services between India and Britain reached nearly $57 billion. Together with the other changes in the agreement, the government expects a steep 59.4% increase in U.K. exports to India, worth £15.7 billion. This is matched by a more minor 25 percent increase in Indian exports to Britain, worth £9.8 billion.

 

 

Image source: Times of India

‘In the last quarter of FY24, India’s GDP grew by 8.2 percent, with its GDP doubling in a decade to reach $4.3 trillion in 2025. Now poised to surpass Japan, India is on track to become the world’s third-largest economy by 2027, according to the IMF.

According to the Department for Trade and Business, the trade deal between the world’s fifth and sixth largest economies was finalised three years after Modi and his former British counterpart, Boris Johnson, set a target of concluding the FTA by October 2022. However, the deal was hampered by tariff differences, professional mobility, and UK political instability, and was not signed until May 6, 2035, amid the chaos of the Trump tariffs.

It comes into effect in 2026 and will herald exclusive access to 40,000 tenders with a value of at least £38bn a year” It will involve more British workers on a short-term basis going to India,” Reynolds said.

Its detractors have criticised it for its lack of impact assessment, its potential risk to British market competitiveness, and a half-baked national insurance scheme, according to liberal democrat Daisy Cooper. Indian nationals applying for UK roles will not benefit, so there is no disadvantage to British workers.

Whilst the internal treasury calculated an eye-watering 200 million in lost taxes. “At that time, the total benefits of the deal were only £ 1 billion to £ 2 billion in GDP growth by 2035, and there was nothing on financial services, so it didn’t seem worth doing.” This was notwithstanding spikes in the existing annual 20,000 Indian immigrants to Britain.

Everything is about perspective, and from the Indian perspective, the country is currently positioned as the world’s fastest-growing economy. Its establishment as a trade power is going from strength to strength as it negotiates free trade agreements (FTAS) with the EU, the US, Oman, Peru, and New Zealand.

According to Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises, “This is not only a pivotal milestone in the history of relations between our two great nations, but one that promises to be the gateway to an era of flourishing bilateral cooperation, shared innovation, and enhanced people-to-people connections.”

Mittal is right; it’s more than a pivotal milestone between two powerful nations. There is a golden opportunity to develop a new modern-day golden road, through the rebirth of a ‘new look Indosphere’, moving India into a new golden era.