The bonhomie between the Prime Minister Narendra Modi and UK Prime Minister Rishi Sunak was at display when the duo recently met in Hiroshima during the G-7 summit and the photo released by the British High Commission in India had a caption ‘’Ek mazboot dosti (A strong friendship).”
The two leaders during their meeting discussed a whole range of issues including the Comprehensive Strategic Partnership, innovation, science, and ongoing negotiations between India-UK Foreign Trade Agreement (FTA).
They decided to further increase cooperation in trade and investment, science and technology, higher education and people to people relations. Both the Prime Ministers had dropped sufficient hints that India and UK business relations will not only increase but further strengthen in future.
Taking a trigger from the ‘’very fruitful & productive’’ discussion between the two Prime Ministers it will be quite interesting to mention here the present state of trade and investments between India and UK and how it will be further increased.
As per the Uk Department for Business and Trade data released on May 18, total trade in goods and services (exports plus imports) between the UK and India was £35.9 billion in the four quarters to the end of Q4 2022, an increase of 45.0% or £11.2 billion in current prices from the four quarters to the end of Q4 2021. Of this £35.9 billion. Total UK exports to India amounted to £15.1 billion in the four quarters to the end of Q4 2022 (an increase of 61.5% or £5.8 billion in current prices, compared to the four quarters to the end of Q4 2021).
Total UK imports from India amounted to £20.8 billion in the four quarters to the end of Q4 2022 (an increase of 35.0% or £5.4 billion in current prices, compared to the four quarters to the end of Q4 2021).
India was the UK’s 12th largest trading partner in the four quarters to the end of Q4 2022 accounting for 2.1% of total UK trade.
In 2021, the outward stock of foreign direct investment (FDI) from the UK in India was £19.1 billion accounting for 1.1% of the total UK outward FDI stock.
In 2021, the inward stock of foreign direct investment (FDI) in the UK from India was £9.3 billion accounting for 0.5% of the total UK inward FDI stock.
‘’In the current geo-political scenario and the post COVID economic development, India stands out as a shining star. With high GDP growth which has great potential for further growth in the years to come, this presents a unique opportunity for the UK to engage more constructively in the post Brexit scenario. Both the countries can collaborate in the areas of defence, telecommunication, infrastructure, hi-tech, railways, renewable energy, Artificial Intelligence and digital governance besides others. The FTA which is being negotiated for several years should be concluded at an early date in the spirit of give and take. This will open up new vistas of opportunities for businesses from both sides,’’ said Sushil Jiwarajka, past Chairman, Western Regional Council, FICCI.
According to the Ministry of External Affairs, India invested in 107 projects and created 8,664 new jobs in the UK to retain the position of second-largest source of foreign direct investment (FDI) after the US, according to the Department for International Trade (DIT) inward investment statistics for 2021-2022. The number of projects and jobs increased in comparison to the 2020-21 figures of 99 projects and 4,830 jobs. As per the CII-Grant Thornton India meets UK Report 2022, there are 900 Indian companies operating in the UK, with combined revenues of almost £54.4 billion. Together, they paid over £304.6 million in corporate tax and employed 141,005 people.
This figure excludes employees of UK branches of Indian companies.
As far as UK’s investment in India is concerned, UK is the 6th largest inward investor in India, with a cumulative equity investment of US $ 32.82 billion (April 2000 – September 2022), accounting for around 5.3% of all foreign direct investment into India.
The Indian Diaspora in the UK is the largest ethnic minority community in the country, including approximately 1.7 million British nationals of Indian origin and about 3,00,000 NRls living in the UK equating to almost 2 percent of the UK population and contributing 6% of the country’s GDP. At present there are sixteen Indian origin MPs in the UK Parliament.
As per the report ‘India in the UK: The diaspora effect’ prepared by Grant Thornton and FICCI, there are over 65,000 companies owned by Indian diaspora. The report researched 654 companies with turnover of more than £100,000 per year. Their combined revenue is £36.84 billion, they paid over £1 billion in corporate tax, invested over £2 billion through capital expenditure, and created over 174,000 jobs.
Against this backdrop, business and industry leaders expect an early conclusion of the Foreign Trade Agreement (FTA) between India and the UK. They observe that a deal is crucial for India which hopes to become a bigger exporter, while the UK would get wider access for its whisky, premium cars and legal services. Both countries are aiming to double bilateral trade by 2030 via such a deal.
IMC Chamber of Commerce and Industry Chairman (International Business Committee) Dinesh Joshi argued that the much awaited India UK FTA would be promising for both the nations. We can see a significant acceleration in bilateral trade to the tune of about 35 billion pounds. With the increase in trade there will also be increase in bilateral investments and create lacs of jobs both ways. India has been UK’s 12th largest trading partner ending Q3 2022. This agreement will make India as one of the top 10 trading partners of the UK.
‘’India will gain in bringing good technology, innovations and infrastructure expertise and investments from the UK based companies. Reduced trade barriers will give access to more Indian products. On the other hand, the UK will get access to the rapidly growing Indian market and its economy which is 5th largest in the world. The MSME sector will benefit immensely through this FTA. IMC Chamber welcomes the India UK proposed FTA as it will contribute to the country’s growth,’’ noted Joshi.
