How will the west react when India’s economy surges?

It now makes massive sense for the UK, and indeed Europe, to build closer economic ties with what will soon be the world’s third largest economy, writes Hamish McRae

Within a decade India will go from being an important economy to a massively important one (Getty/iStock)

The UK has signed an “enhanced partnership” with India and it seems likely that the EU will open formal trade talks shortly.

You can see this in terms of competition between the UK and the EU – who will sign a trade deal first? – but I think it is more helpful to see it in terms of India opening its economy to the world. After all, the EU tried to do a free trade agreement with India back in 2007 (when of course the UK was a member) but negotiations were abandoned in 2013 “due to a gap in the level of ambition between the EU and India”, as the European Commission website reports. 

The economic balance has shifted massively over the past decade. India was then a much smaller economy than the UK. Now it is roughly the same size – it probably passed the UK last year, but we don’t have full figures yet.