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SOURCE: Nikkei Inc.

The U.K.’s coronavirus health crisis has compelled British Prime Minister Boris Johnson to call off a visit to India that was meant to advance the two countries’ economic ties ahead of the Group of Seven summit.

Johnson “spoke to Prime Minister [Narendra] Modi this morning, to express his regret that he will be unable to visit India later this month as planned,” a Downing Street spokesperson said, adding that Johnson said “it was important for him to remain in the U.K. so he can focus on the domestic response to the virus.”

The British prime minister was to have been a guest of honor at India’s Republic Day celebrations on Jan. 26. The trip was set to take place as Britain’s attention turns to the Indo-Pacific region.

Johnson’s government has invited India, South Korea and Australia as “guest nations” to the G-7 summit that the U.K will chair this summer. This invitation is seen as confirming the U.K.’s Asian push and helping create a democratic coalition to check China’s growing maritime presence.

Johnson promised to make the trip to India in the first half of 2021. British sources said agreements on facilitating defense sales and joint ventures, as well as an enhanced trade partnership, will come to fruition, even if delayed.

As the U.K. charts a new path on trade outside of the European Union, India stands as a key market. Britain’s defense exports to India, the world’s second-biggest arms importer after Saudi Arabia, has lagged behind those of Russia, Israel, France and the U.S.

No major Indian orders have been clinched by the U.K. since 2004, other than BAE Systems deal for 123 Hawk trainer planes worth about $1.5 billion for the Indian Air Force and its sister company in the U.S. supplying 145 ultralight M-777 howitzers for the Indian Army for a reported $737 million. The Eurofighter Typhoon, in which BAE System enjoys a significant stake, lost out to France’s Rafale in the Indian Air Force’s acquisition of medium multi-role combat aircraft.

Modi’s policy of government-to-government transactions has been to Britain’s disadvantage. Rahul Roy-Chowdhury, of the International Institute for Strategic Studies, said, “The U.K. does not, as yet, have such a framework for arms sales, relying instead on commercial-led transactions.”

Despite holding the world’s third-largest military budget at nearly $75 billion, India is bereft of an adequate defense production base. To compensate, a 74% foreign equity and control in defense sector joint ventures are now permitted to attract overseas investors.

A survey carried out by the UK India Business Council elicited a 77% positive response to such opportunity from British companies. However, Kevin McCole, the council’s chief executive, said: “There remains some concern that Atmanirbhar Bharat [Modi’s self-reliant India policy] could lead to protectionist measures.”

The opinion poll also revealed concern about Indian tax rates, corruption, legal and regulatory impediments and price points and the U.K.’s ability to finance and manage ventures in India.

Nevertheless, the two countries’ current concern over China is a catalyst for cooperation. A British Foreign, Commonwealth and Development Office (FCDO) memo marked “sensitive” said: “For the U.K. and India defense and security relationship, 2021 promises to be an important year.”

Britain is eyeing the Indian Air Force’s need for more medium multi-role combat aircraft together with the Indian Navy’s requirement of multi-role carrier borne fighters for its domestically built aircraft carrier, which enters sea trials next year. It is also keen on responding to the Indian Navy’s search for utility helicopters.

Johnson had assured Modi of the U.K.’s commitment to security in the Indo-Pacific region. The Royal Navy’s new aircraft carrier, HMS Queen Elizabeth, accompanied by two anti-aircraft destroyers and as many anti-submarine frigates, will undertake its first deployment to the region in the second quarter of this year.

The Royal and Indian navies could conceivably also hold their annual joint exercise, which is due, in the summer in a show of solidarity to China.

India’s relationship with China remains tense after Chinese troops allegedly entered Indian territory in Ladakh in May and have yet to withdraw. Meanwhile, Britain has criticized Beijing for breaching its commitment to retain Hong Kong’s autonomous system by enacting national security laws on the island. On the security front, a greater sharing of intelligence — which Britain does not extend to India on Pakistan — appears to be on the cards as well.