As Brexit Britain looks to the East for bilateral trade and investment, we explore perspectives from thought-leaders in the UK-India trade corridor.
In the early 1990s, the Indian government made a major effort to liberalise and globalise the nation resulting in impactful growth for the economy. In recent years, there have been a multitude of bilateral trade agreements between the UK-India designed to strengthen ties and build on this growth; including the India-UK Economic & Financial Dialogue (EFD) and the India-UK Joint Economic and Trade Committee (JETCO).
In the last half a decade, trade between the two countries however, has fallen from $15.7bn a year to $14bn. Recent statistics show just 1.7 per cent of British exports go to India. Despite this, the relationship between the Republic of India and the United Kingdom of Great Britain has incredible potential.
Forbes recently published an article stating that: “India’s economy will be larger than the UK’s, for the first time in more than 100 years.” This mammoth change is the result of two key factors; Brexit and India’s significant economic growth over the past 25 years. According to The Times of India: “India has managed to overtake UK’s GDP first time in nearly 150 years.”
THE CURRENT STATE OF AFFAIRS
In the brief published by the High Commission of India on India-UK Bilateral Economic Relations; “today the UK is the 3rd largest inward investor in India, after Mauritius, and Singapore with a cumulative equity investment of US $ 23.10 billion.”
The UK’s chancellor insisted the relationship between the two countries were strong due to their “cultural ties”. “I suspect [Britain’s colonial rule of India] has become increasingly an irrelevance, except for the legacy footprint,” he said. “We have a legal system and a governance system that is still visibly in the same mould.”
From a cultural perspective, 2017 marked a historically significant year for the two countries who launched a bilateral initiative to mark cultural ties. The British Council, the Indian High Commission and the UK Government launched the initiative alongside Her Majesty, The Queen who hosted the official initiation of the UK-India Year of Culture at Buckingham Palace alongside the Indian Finance Minister, Arun Jaitley, who represented Prime Minister Narendra Modi. The Rt Hon. Baroness Prashar, British Council Deputy-Chair and Chair of the Board of Patrons of the Year of Culture said: “The UK-India Year of Culture marks the coming together of the world’s oldest democracy and its largest democracy to celebrate long standing cultural connections and inspire new ones. UK and India are cultural epicentres of the world, with a rich heritage, similar outlook and much to share.”
FUTURE OF UK-INDIA TRADE RELATIONS
India is one of the fastest growing economies in the world. The country is huge – meaning the market is diverse and requires patience and long-term strategic planning to be successful. Pratik Dattani, Country Director for the UK Federation of Indian Chambers of Commerce and Industry (FICCI) recognises the advantages and challenges involved to strengthen ties. There is “enormous potential for trade to blossom between the two countries” says Dattani. “But there is a long way to go before that can happen. The economic relationship between the United Kingdom and India is heavily based around investment, rather than trade.”
The future of this continued relationship can be distilled down to its very core: identifying the key sectors and maximising opportunities through growth which is sustainable and, ultimately adds value. More sectoral verticals are opening in areas such as technology, digital and education. The future of the economy seems ever promising.
The future also lies in human capital. In a recent post for LSE, Nikita Sud, Associate Professor of Development Studies at the University of Oxford wrote: “Britain is home to more than 800 major Indian-owned businesses that employ 110,000 people and have a combined turnover of 26 billion pounds.” One of the obstacles for British negotiators however, is immigration. India is pro greater liberalisation of the UK visa regime for intra-company transfers and particularly for students.
So, how could India strengthen the bilateral trade and investment relationship with the UK? Suhel Seth, Managing Partner of Counselage India; India’s only brand marketing consultancy focused on advisory services to Chairpersons and CEOs on business strategy, says the focus must be on developing and nurturing key sectors. “By encouraging more sectors such as hospitality and IT to further spread their wings on the investment front, India has already climbed the Ease-of-Business charts and is doing a lot more in the area of Minimum Government, Maximum Governance. The fact that Start Up India is also taking augurs well both for UK manufacturers and investors” means that strengthening our relations is just a matter of time and patience. Last year Indian IT services generated $146 billion in revenue alone according to the Business Insider.
Business leaders from both India and UK have signalled their commitment to improving trade, investment and economic collaboration during the India-UK CEOs Forum. “India and the UK identified the six overarching themes as important areas of collaboration to take forward: smart cities and the digital economy, healthcare, education and skills, engineering, defence and security, financial and professional services”; thus an investment by British companies in the Indian economy would be a win-win partnership for both nations.
Vijay Goel, Partner at Singhania & Co LLP and Chairman of London Chamber of Commerce Asian Business Association also highlights the importance of the future of the two countries’ mutually beneficial growth. “The UK and India remain committed to working together to substantially increase trade and investment opportunities. Both sides are committed to further strengthening the economic relationship, through deepening the bilateral trade and investment relationship. This is our vision.”
There is no doubt, that despite its vision for a collective growth, it is a difficult time for the Republic of India and the United Kingdom of Great Britain when it comes to their trade relations.
However, the beauty of the UK-India relationship is historic and has been cultivated over centuries. It is these cultural ties which will hold strong and bring the two countries closer together.
FARZANA BADUEL. CEO | CURZON PR
Farzana Baduel is Founder and CEO of Curzon PR, the award-winning marketing communications agency trusted by international governments, listed corporates, luxury & cultural brands. Farzana set up Curzon in 2009 after previously serving as Vice Chair of Business Relations for the British