THE bonhomie between Prime Minister Narendra Modi and UK Prime Minister Rishi Sunak was at full display when the duo recently met in Hiroshima during the G7 summit. Both the Prime Ministers dropped sufficient hints that India and UK business relations will not only increase but further strengthen in future.
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 2021- 2022, an increase of 45 per cent or £11.2 billion in current prices in 2020-2021. Total UK exports to India amounted to £15.1 billion in 2021-2022 (an increase of 61.5 per cent or £5.8 billion in current prices, compared to 2020-2021).
Export-import figures
Total UK imports from India amounted to £20.8 billion in 2021-2022 (an increase of 35 per cent or £5.4 billion in current prices, compared to 2020-2021). India was the UK’s 12th largest trading partner in 2021-2022 accounting for 2.1 per cent 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 per cent of the total UK outward FDI stock.
In 2021, the inward stock of FDI in the UK from India was £9.3 billion accounting for 0.5 per cent of the total UK inward FDI stock. 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 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. The UK is the sixth largest investor in India, with a cumulative equity investment of US $ 32.82 billion (April 2000 – September 2022), accounting for around 5.3 per cent of all FDI into India.
The diaspora effect
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 non-resident Indians (NRIs) living in the UK equating to almost 2 per cent of the UK population and contributing 6 per cent of the country’s GDP. At present there are 16 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.
Both sides to gain
Against this backdrop, business and industry leaders expect an early conclusion to 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.
According to IMC Chamber of Commerce and Industry, 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 lakhs of jobs both ways. India has been UK’s 12th largest trading partner. This agreement will make India one of the top 10 trading partners of the UK,” says the Chamber
