A new report by the UK India Business Council (UKIBC) shines a light on the sectors that hold the greatest promise for an Enhanced Trade Partnership between India and the UK.
The UK has spelt out its post-Brexit “Global Britain” agenda, with a marked focus on the Indo-Pacific region as laid out in the Integrated Review released in March. Simultaneously, India is projected to become the world’s third largest economy by 2030. Both these developments provide enormous opportunities on both sides, propelled by India’s reform agenda.
The UK-India Business Council (UKIBC), which plays an advocacy role in bilateral relations, released its annual report this week – ‘Advocating Business Success in 2021’ – as a review of where things stand ahead of British Prime Minister Boris Johnson’s visit to India at the end. It concluded that many UK businesses of all sizes are already succeeding in India and India is the second-largest investor in the UK. The report concludes that with the collective ambition of business and government on both sides, trade and investment is set to flourish as an Enhanced Trade Partnership edges closer.
The report notes that the UK and India have long been important economic partners and that mutually beneficial relationship has grown significantly in the last year, despite the Covid-19 pandemic. The joint effort on the Oxford-AstraZeneca vaccine produced by the Serum Institute of India in Pune is exemplary of the valuable outcomes that can be achieved when the UK and India come together. That trend is set to continue – India’s foreign direct investment (FDI) cap has been extended from 49 per cent to 74 per cent in the insurance and defence sectors and the country’s new National Education Policy introduced in 2020 sets a precedent for internationalisation of higher education in India and for Indians looking to study abroad.
UKIBC Group CEO Jayant Krishna said: “The bilateral relationship has stepped up significantly this year amidst India’s self-reliant goal and the UK’s post-Brexit agenda, and as such it is a really exciting and opportunistic time for companies in both countries.”
He flagged the key successes of advocacy as a reduction in India’s corporate tax rate, the increase in India’s FDI limit in the insurance sector, and India’s globalisation agenda under its new National Education Policy 2020, FDI cap increase from 49 per cent to 74 per cent through the automatic route for the defence sector, and increase in the ceiling prices of 21 drug formulations by 50 per cent.
On the UK side, the two-year post-study work visa for international students in higher education courses in Britain is flagged among some welcome initiatives.
Indian Prime Minister Narendra Modi has consistently set out to reform the Indian business environment, recognising that doing so is essential not only for internal growth but also to attract foreign investment, an important facet if India is to reach the government’s goal of a $5 trillion economy in the near future. Against this backdrop, the UKIBC notes that reforms have centred on boosting the private sector as well as attracting foreign investment. Streamlining regulations, including the Goods and Services Tax (GST), improvements to infrastructure, and utilising technology have all been further benefits to business.
Meanwhile, the UK has left the European Union, after the 11-month-long transition period ended on in December last year and the new EU-UK Trade and Cooperation Agreement came into effect. Under the conviction of the UK government’s “Global Britain” agenda and a new trading relationship with the world, the UK has ambitions of its own, with India an important factor.
UKIBC Managing Director, Kevin McCole said: “We have recently stepped up our efforts to help Indian companies navigate the UK, which is fast changing and not just because it has left the EU.
“The UK is also changing because of economic policies being put in place to build back better from the Covid recession, and because of devolution to Scotland, Northern Ireland, Wales and to the major cities that have powerful elected Mayors. All of this is new and relevant for Indian businesses.”
The three priority sectors identified during the India-UK Joint Economic and Trade Committee (JETCO) last year had included: food and drink; life science and healthcare; and digital and data services.
The UKIBC conducted a review of the working groups it led across the three priority sectors, consolidating feedback into reports that outline the opportunities for the UK and India to work together and to boost trade and investment. The co-chairs of each working group have presented these recommended market access reforms to the ministers.
As part of that, plans for 2021 include continued advocacy for data regulation (both personal and non-personal) that balances privacy and innovation and allows cross-border data flows between the UK and India. Standards alignment between UK and India will also be a key goal in 2021. Further investment in digital infrastructure to provide a sustainable commercial environment, with a stable and predictive regulatory framework, is also on the agenda.
“Digital healthcare is an inviting opportunity for UK-India collaboration because of the UK’s leading capabilities coupled with India’s capabilities in tele-medicine, advanced diagnostics, and home healthcare, as well as the need to further improve its healthcare systems,” the report notes, in reference to the life sciences and healthcare sector.
In the food and drink sector, the goals are centred around attaining e-governance, ease of doing business reforms, and fostering greater trade linkages between the two economies.