Emergence of Innovation Hubs and Employment as an Impact of UK-India bilateral trade


According to Bain & Company’s India Venture Capital Report 2022, in 2021 global VCs led more than 90 mega-rounds of over USD 100 Mn in funding compared to approximately 20 in 2020. VC funding reached a total of USD 38.5 Bn  growing by a factor of four from the previous year. Of the top five investors in India, four are US-based firms including Tiger Global and Sequoia Capital, with the other being the Japanese VC firm SoftBank. India has been a forefront recipient of foreign direct investment in the aftermath of the pandemic. Some UK investors have bucked the trend and gained exposure to the Indian market early on. In 2014, British International Investment (BII) — the UK government’s development finance institution — began investing in India’s digital start-up segment. Now, BII has a combined portfolio of USD 3.08 Bn in India.

UK and Indian businesses will confirm more than 1 bn pounds in new investments and export deals today in areas from software engineering to health, creating almost 11,000 jobs across the UK. That includes:

  • A new Switch Mobility electric bus R&D centre in the UK and the opening of their Asia Pacific Headquarters in Chennai, generating over 1000 jobs in the UK in India;
  • Investment from leading Indian manufacturer Bharat Forge and electric truck maker Tevva Motors to expand to a new site in the south-east and create 500 new jobs;
  • Indian software company Mastek investing 79 Mn pounds to create 1600 jobs over the next three years all over the UK;
  • Business consultancy FirstSource opening new offices in South Wales, the Midlands and cities in the North-East and North-West.
  • Hertfordshire-based firm Smith+Nephew agreeing major deals to sell robotic surgical systems in India, and Northamptonshire business Scott Bader opening a new resins factory to supply top renewable energy companies in south-east Asia.

UK’s Initiatives to improve Bilateral Trade Investments with India

India and the United Kingdom share a modern partnership bound by strong historical ties. The UK is the 6th largest investor in India and has invested USD 32.18 bn in FDI inflows between April 2000 to  June 2022. There are currently 572 UK companies in India with a combined turnover of USD 48 Bn and directly employing 416,121 people directly as of FY20. The range of sectors attracting investment from the UK has seen strong growth in education, retail, consumer goods, life sciences, healthcare, and infrastructure. India is the 2nd largest FDI contributor in the UK. Over 900 Indian companies operate in the UK which has generated a total turnover of USD 68.04 Bn, employing 141,005 people in 2022.

India’s trade in goods and services with the UK increased to USD 31.34 billion in 2022 from USD 19.51 billion in 2015. One of the key highlights of the India-UK economic relationship in recent times was laying the groundwork for the India-UK Free Trade Agreement (FTA).

The UK will also confirm major new science and tech collaboration including a digital health partnership and a joint investment fund for Indian deep-tech and AI start-ups supported by the UK and Indian governments. New AI scholarships will be funded for Indian students by the Chevening programme and Adani Group. 

Indian expansions in Great Britain

In 2022, despite low-key merger and acquisition (M&A) activity, the India-UK corridor witnessed 13 deals including India’s Wipro Ltd acquiring Capco, Reliance Group acquiring Faradion Ltd and Bharti Enterprises acquiring OneWeb Ltd, the report noted. 

In the interest of increasing the scope and level of bilateral trade and investment engagement, India has begun promoting targeted sectors to the UK. AI healthcare specialists Qure-ai will invest 6 Mn pounds to open a centre in the UK.  Tech Mahindra has created 1,000 jobs in the UK, Mphasis invested 5 Mn pounds to set up an office in England and generated 700 high-skill jobs, Prodapt invested 100 Mn pounds to expand its software and tech service operations and create 500 jobs, TVS Motors invested 100 Mn pounds in Norton Motorcycle and created 250-300 direct jobs and 500-800 indirect jobs, Medtech Startup Goqii invested 10 Mn pounds to expand in the UK and create 100 high-quality jobs, Byju’s chose the UK to be their first global innovation hub, creating 55 jobs with a 15 Mn pound investment, are some of the other deals on Indian expansions in UK.

The year 2022 marks 75 years of bilateral relations between the two countries post India’s independence from British rule. Even before India’s independence, UK companies, such as Britannia, Unilever, Oxford University Press, HSBC, Amalgamated Metal Corporation, British American Tobacco and GlaxoSmithKline, had made India their home and are household names even today.

​​This May marked the conclusion of the third round of negotiations for a free trade agreement (FTA) between India and the UK. This deal will aim to double trade and investment between the two countries by 2035, adding an excess of  28 bn pounds in trade value per year. 

Leading strategists have planned such expansions bases key sectors and sub-sectors, specific appeal for products, suitable locations based on concentration of companies, leading players, investible projects, and FDI rules. The Finance Minister has continued with the underlying theme of seeking to provide a stable and predictable tax regime to promote voluntary compliance, to reduce litigation, while keeping the overall tax structure unchanged.

  • TVS Motors: Investing around £100m in iconic British brand Norton Motorcycle. This is expected to create 250-300 direct jobs over the next 3 years and another 500-800 indirect jobs across the supply chain.
  • Brinton Pharmaceuticals: Setting up a global research and development hub in the UK with an investment of £30m, creating around 300 jobs.
  • Goqii: MedTech Startup Goqii investing £10m to expanding in the UK, creating 100 high quality jobs

India is set to become the world’s third biggest economy by 2050, with a bigger population than the US and EU combined. A deal has the potential to almost double UK exports to India, boost our total trade by as much as 28 Bn pounds a year by 2035, and increase wages across the UK by up to 3 Bn pounds. India expects to increase exports of leather, textiles, jewellery and food products besides more visas for Indian students and businesses. Leading Indian companies were already setting up research and design facilities in Britain to develop their own technologies, particularly for batteries for electric vehicles, and in other sectors like health care.  

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