India has increasingly looked as an attractive destination for British businesses and vice versa seeking to relocate their operations from China. Ironically, it's the pandemic that has brought both countries closer than ever before, thanks to collaborations in key areas such as vaccine development, innovation and manufacturing.
India and the UK might be bang in the middle of an epic battle against the coronavirus, but both nations seem to have struck post-pandemic gold with their growing investments and strategic engagements in each other's markets. And what better time and market to invest in than India, which has been increasingly looking as an attractive alternative for British businesses seeking to exit China in view of prevailing global sentiments. “The UK and India have started looking at opportunities emanating from the business sentiments worldwide to explore manufacturing supply chain possibilities as alternatives to China,” said Jayant Krishna, CEO of the UK-India Business Council (UKIBC). According to Krishna, British businesses are very keen to support Indian Prime Minister Narendra Modi's “Aatmanirbhar Bharat” or Self-Reliant India mission. The enthusiasm for such investments stems not from a Greenspanian irrational exuberance or a post-colonial hangover, but based on the cold, hard reality of facts on the ground.
Where does UK-India bilateral trade stand
While UK-India bilateral trade has increased steadily in the years since 2000, it grew by 9.74% to more than $31.7 billion in 2019. Since 2016, Indian companies have raised $15 billion in masala, dollar and green bonds on the London Stock Exchange, and New Delhi is acutely cognizant of London's position as the leading global financial centre and destination for long-term institutional investment.
A crucial meeting of the UK-India Fast Track Mechanism, held in December 2019, helped resolve several issues
faced by UK companies and secured approval for additional UK investment in India, and since then both countries have focused on boosting bilateral trade, with an emphasis on promoting investment flows and a positive investment environment. The India-UK Joint Economic and Trade Committee (JETCO) met amid the Covid-19 pandemic as recently as last month, with a mutually satisfactory summit between Indian Commerce & Industry Minister Piyush Goyal and UK Secretary of State for International Trade, Elizabeth Truss. A UK-India Investment Dialogue is scheduled in due course, while the prospect of a Free Trade Agreement (FTA) hangs thick in the air, preceded by an Enhanced Trade Partnership.
How is India helping speed up investments
Against such a promising backdrop, it's ironically a virus spreading from China that has brought the UK and India closer than ever before. “UK businesses are looking at India as an incremental base for manufacturing and research and development,” said Krishna, adding that companies from the UK have for long invested in India across sectors and the country is an increasingly attractive proposition for businesses looking to explore alternate destinations for their global supply chain.
It's a sentiment shared enthusiastically by Nitin Gadkari, the Indian Minister for Road Transport & Highways and MSMEs. Earlier this year, as the global condemnation of China's response to the Covid-19 pandemic grew shrill and foreign companies grew increasingly wary of the operating amid an opaque business climate in China, Gadkari exhorted captains of Indian industries to go the whole hog to seize the “golden opportunity,” urging Indian firms to explore technical tie-ups with companies in the UK and US operating in China and set up manufacturing units in India. Such an initiative, he said, would attract billions of dollars of fresh investments into the country's manufacturing sector.
With Prime Minister Modi frequently highlighting the centrality of sectors such as manufacturing, infrastructure, energy, pharma, space and defence, to global cooperation - including most recently in a keynote address at the India Global Week - the great complementarities between India's needs and the UK's offerings have only become clearer. “These are all areas ripe for India-UK collaboration in creating 'Aatmanirbhar Bharat', underpinned by both nations′ strong track-record in technology and innovation,” Krishna said.
Is a UK-India FTA on the cards
As the UK forges a new trading relationship with the world into 2021 and India establishes itself as a responsible global power, New Delhi has fast emerged as a key priority for trade and investment of the UK government and businesses. A sincere reflection of that is found in the joint statement of the JETCO scripted by Goyal and Truss: “We look forward to go further in building links, bringing down barriers, and creating value between our two economies as the UK assumes responsibility for its independent trade policy. To deliver this, we seek to agree to an Enhanced Trade Partnership as part of a roadmap that could lead to a future FTA. The Enhanced Trade Partnership will seek to address non-tariff barriers to trade, and will establish a specific dialogue to explore routes to removing tariff barriers.”
Despite the onslaught of Covid-19, India has geared up to welcome a spate of foreign direct investments with broad-based structural reforms and utilizing sweeping geopolitical mood shifts to recalibrate its trading relationship with the world. “This outreach has been an ongoing process,” Deepak Bagla, the CEO of Invest India, told the BBC in a recent interview. “Covid-19 will only accelerate the process of de-risking from China for many of these companies.” Whether it's attracting top-tier British companies, closely collaborating on vaccine research or supporting each other at global multilateral platforms, the sun only seems to be rising on a new era of Indo-British growth and prosperity.