With a PM Modi victory looking highly likely, I was asked by the Daily Express how important India will be to the UK economically. A lot of my readers ask about investing in India, seeing the growing wealth.
Almost 20 years ago, the then UK Prime Minister appointed me to the UK India Roundtable to suggest policies to the Prime Ministers of both countries to increase ties. Both country’s Governments have sought closer ties for decades. But what of the future? What more can be done?
India‘s GDP grew at 7.1% in 2016- 2017, and is expected to grow at 7.4% in 2018-19, when it will overtake the GDP’s of the UK and France.
Initiatives to boost Indian GDP by PM Modi also boost UK exports such as Access India Program, a market entry support program aimed at facilitating investments by UK SMEs in India.
Since 2000, the UK has been the largest G20 investor in India, investing £17.5 billion and creating 371,000 new jobs which represent 10% of all FDI-related jobs in that period. British companies in India now employ almost 800,000 people, representing 1 in 20 jobs in India’s organised private sector.
Over the last two decades, 8% of all foreign direct investment (FDI) into India was from the UK.
Of the 600 UK businesses present in India, almost 60% operate in two sectors: advanced engineering & manufacturing; and financial & professional services.
Around 60% of UK companies in India have a turnover of less than £5 million per year – so it is not just a few big companies representing growth.
Well I don’t think the UK has undersold itself, I think India, unlike say America, Japan, Qatar, Saudi Arabia, Singapore, Malaysia, has not grasped the size of the UK opportunities.
PM Modi knows it is initiatives like his ‘Digital India’ program and focus on AI, Fintech, IoT, big data, robotics, which will tie India to countries such as the UK – also a global leader in every sector the Indian PM has identified for a strong vibrant India. But there is untapped potential.
First, consider, that the during the past 5 years, according to the Financial Times last year, trade between the two countries has fallen from $15.7bn a year to $14bn. Just 1.7% of British exports go to India, less than go to Sweden and a fraction of 44% that goes to EU.
Second, having heard this PM speak in London well before he was a PM thanks to the founder of this publication, one knows he does feel intellectual property protection does not necessarily benefit Indian growth. The patent revocation for GSK’s Tykerb would not have troubled the PM. But it may trouble investment from the UK into India.
What will boost trade, making UK more attractive in India?
According to UKIBC ‘Request for product or service from customers in India’ emerged as a key factor, with 62% of respondents rating it ‘Very important’, followed by ‘Visiting the markets (personally)’ with 53% respondents highlighting it as ‘Very important’ for why UK companies were active in India.