According to Grant Thornton’s India meets Britain Tracker, the launch of Free Trade Negotiations at the start of the year and the prime minister’s official visit last month has led to Indian companies continuing to make a “significant contribution” to the UK economy. The research also identifies 37 Indian companies that are fastest growing – those with a turnover of more than £5m, year-on-year revenue growth of over 10%, and a minimum two-year track record in the UK.
The UK government mirrors this focus on ‘place’ through devolution deals, local industrial strategies and regional growth agendas. India also recognises the importance of place. Its population of nearly 1.3bn live across 29 states, each with distinct dialects, cultures, industries and business environments. Understanding the role of regions in both countries opens up significant opportunities between them—both separately and bilaterally.
Through this process, UK has identified Grand Challenges that they will set for the UK government and broader economy. These are in response to global forces that will shape our rapidly changing future, and which the UK must embrace to ensure we harness all the opportunities they present. The Grand Challenges commit to Ideas, People, Infrastructure, Business Environment and Places. In UK’s upcoming economic growth strategy, UK put AI and Data revolution at the forefront of development. They aim to maximise the advantages for UK industry of the global shift to clean growth and become a world leader in mobility. The UK boasts strengths and diversity across all its regions. According to UK Economic Outlook, London’s longstanding lead in UK regional growth is driven by services and tourism. Elsewhere—for example—the North West is strong in manufacturing and the Midlands in innovation and connectivity.
Economic growth and trade pick up as COVID-19 impact falls back
Following negative growth in 2020, the Indian and UK economies bounced back during 2021 as vaccines began to bring the pandemic under control. India forecasts GDP growth of 9.2% for 2021–22 and 8.0–8.5% for 2022–23. These figures will make it the world’s fastest-growing economy between 2021–24.4 Meanwhile, economic activity in the UK also began to return to pre-pandemic levels in 2021, with the government reporting growth of 7.5% for the year. This is the fastest growth among the G7 countries. Trade between the two countries showed a similar recovery. Figures for the four quarters ending September 2021 show that total trade between India and the UK increased to £21.5 billion, up £1.7 billion on the previous four quarters.6
Indians view London as a safe investment destination as the legal system and accounting systems in the UK are similar to the ones in India. Indian investors remain a leading source of foreign direct investment into the UK The latest figures on inward investment into the UK cover 2020-21 when pandemic-related disruption was significant. Unsurprisingly, they show that the number of overall foreign direct investment projects into the UK fell. Nevertheless, India remained a leading source of investment, accounting for 99 FDI projects over the period, second only to the United States in terms of project numbers. These projects accounted for 4,830 new jobs (more than any other source market apart from the United States, Germany and France) as well as safeguarding a significant number of existing jobs.
Investments, mergers & acquisitions, and expansions between India and UK
India has remained the second largest investor in the UK for another year as revealed in the UK’s Department for International Trade Foreign Direct Investment (FDI) 2021/22 figures. This year saw 107 Indian-sourced FDI projects that successfully landed in the UK between the financial year 2021-22, which included new investments, mergers & acquisitions, and expansions. These projects created 8,664 new jobs in the UK.
India’s overall contribution to the UK economy is considerable and current trade between the UK and India is worth around £25 billion. In July 2022, the UK and India signed an agreement to officially recognise each other’s higher education qualifications. This will enhance opportunities for Indian nationals to study and work in the UK, with 2020/21 already welcoming almost 85,000 Indian students. This deal is one of several that has shown positive progress towards the final stages of the Enhance Trade Agreement between the UK and India. This is a series of commitments that will create further opportunities and collaboration between the two countries.
Meanwhile, Indian cities, states, and businesses are increasingly seeking partnerships with specific UK cities and regions to drive better research, share technological innovation and leverage the highly skilled UK workforce. We help them do all this through our ‘Invest in GREAT Britain’ partnership with the UK Department for International Trade (DIT).
India and the UK also continue to work closely on increasing the uptake of electric vehicles. To drive transformational change in the transport and mobility sectors, the two countries are working together to develop innovative solutions for sustainable and zero-emission mobility. India’s huge and increasingly prosperous middle class remains an attraction for UK investors, but now, in a remarkable reversal of that trend, Indian companies investing in the UK consider the market potential in that country as the main attraction.