The trade deal with India has run into controversy almost before it was signed. But stand back and look at it strategically and it makes sense to find ways to link what are currently the world’s fifth and sixth largest economies more closely together – particularly since India, number five, will soon pass Germany and Japan to become number three.

Stand back still further, and you can begin to see how the UK’s trading relationships will develop in the changing world economy. That prediction of India becoming the third largest comes from the International Monetary Fund’s latest World Economic Outlook by 2028.

The top half dozen economies by then, and that’s within the life of this Parliament, will be the US, China, India, Germany, Japan and the UK. So five of the world’s six largest economies will be outside the European Union. If the UK can follow the India deal by building closer trading relationships with the US and China, it will have started to reposition the economy away from Europe and towards the top three.

A Brexit benefit

Supporters of Brexit will see this as a dividend from leaving the EU, by making it possible to link the UK to faster-growing and larger economies than those on the continent. But since it may also be possible to smooth out some of the bumps that have built up in European trade despite the free trade agreement with the EU, it’s possible that Britain may be able to get the best of both worlds: reasonable access to the European market and closer ties to the big three.

How realistic is this? Start with India. We are a good fit. It is currently our 11th largest trading partner, with exports up 6 per cent last year and imports 10 per cent. We will see how this develops, but the point is that even without a deal, trade was already booming.

Remember that it was the Tata group that saved Jaguar Land Rover, where BMW and Ford had failed. There are links in pharmaceuticals, and potentially in defence. India is the world’s largest importer of defence equipment, with Russia currently its biggest supplier. Unsurprisingly India is seeking to diversify its purchases.

In addition, the two countries are big exporters of services. The UK is second only to the US, but India is gaining ground with nearly 5 per cent of the world market, with nearly half its exports being services rather than goods. So if global trade continues to shift towards services rather than physical items, as seems to be happening, both India and the UK are well-placed to benefit.

A further point. India not only a fast-growing economy, it is the home of the world’s second largest number of people with middle class incomes, after China. That’s some 500 million – a huge market, and one projected to double over the next 25 years.

This is not to pretend that trade with India is a replacement for trade with Europe. It is simply to note that our interests are intertwined and that this agreement will reinforce a trend that was already established.

What about the two other elements of the post-Brexit trading jigsaw, the US and China? Our relations with both are in a state of flux at the moment for all the obvious reasons. But consider this question. Is it likely that the EU could negotiate a better deal with the US, or with China, than the UK?

As far as the US is concerned, the answer is surely no, and that it is quite possible, even probable, that we can get a better one. The tariffs proposed by Donald Trump on “liberation day” had the EU on 20 per cent and the UK on 10 per cent.

Everything is up for negotiation and it is not very helpful to try to second-guess what will eventually emerge. But it now seems likely that there will be some sort of UK-US trade agreement in the next few days. Even if it is a limited one, the potential benefits are huge.

Moving on from Europe

To be clear, this will not be a substitute for trading with Europe, for while the US is our largest trading partner, bigger than Germany and France combined, it is still smaller than the EU taken as a whole. But an agreement with the world’s largest economy would, in these troubled times, be something worth cheering about.

And China? The relationship will be transactional. The EU is a larger market than the UK, and that should help it negotiate good terms. But we have two things in our favour. One is that the UK is extremely attractive for Chinese students. The US has been the number one choice for many years, with the UK second, followed by Australia and Canada. Europe is not really in the market at all, for far more come to Britain than the whole of the EU combined.

The other is that we can be flexible in negotiation. For example, the EU has put on a high tariff on Chinese cars, though this may soon be altered. We haven’t done so. I don’t know what we gain out of that, but we have sent a signal that we are less protectionist than Europe. That will be noticed in Beijing.

None of this means that the UK should abandon efforts to smooth out ties with Europe. Physical proximity matters. But make no mistake, on a long view, a better trade relationship with the world’s three largest economies is critical to the UK’s prosperity. The deal with India is a key part of that bigger game.

Need to know

I’m fascinated by the shifting perceptions of the pecking order of nations by size of their economies – and most recently by the reassessment of India’s place.

Whereas a few years ago the general view was that India was likely to reach No 3 some time in the 2030s, now we have the IMF reckoning that this is only three or four years away. The reason is simply that India has maintained its growth performance while both Japan and Germany have faltered. In fact, despite having two years in or near recession, Germany has now passed Japan to be briefly number three. Japan has lagged to an even greater extent.

As you might imagine this growth spurt has galvanised opinion in India. I spoke at the Times Network India Economic Conclave in New Delhi last December and the theme there was to cheer the country along this path to No 3. It was heady stuff, and it was impossible not to celebrate the country’s progress. Whether or not India becomes a fully-developed economy by 2050 – that’s the aim – it will be much more important, and that is why we should link ourselves with it as closely as practicable.

But there are pitfalls. One is that there is a quite a short window when India has exceptionally favourable demography, with a large increase in young people hitting the job market, and it has to use that window wisely. Huge questions pile up. Top of these is whether its education system is helping train the labour force to fit the jobs available.

There are also concerns about the environment, about access to healthcare, whether the admittedly huge investments in infrastructure are wisely apportioned – and so on. I should also acknowledge some discomfort at the triumphant tone of some of the debate. In a way, Indian leaders are right to congratulate themselves about the achievements of the country. But we all know that when a group of people become over-confident things are liable to go wrong.

We didn’t talk about politics, because that was not the subject of the conclave, but I caught in private conversations real concerns about the political direction of the country – including relations with Pakistan. There is nothing helpful to be said here on that issue, but there is an all-too obvious cloud.

The big point here is that India will matter more and more. We should certainly welcome that. In human terms, lifting hundreds of millions of people out of poverty and towards a middle-class lifestyle and opportunities is wonderful. From our perspective in the UK, a closer trading relationship is enormously welcome too.