The UK and India's bright future beyond Brexit
AI, blockchain, cybersecurity, life sciences and creative industries offer great opportunities for Indian companies in the UK, notes CBI's India head. The ties that bind the UK and India today go beyond the usual rhetoric of shared history, common language and diaspora. It is a relationship that has stood the test of time and is now one of two equal partners standing alongside each other. With over 800 Indian companies in the UK employing nearly 110,000 people and generating revenues of around $63 billion, there is no doubt that India will be a key partner in the UK's global future. The UK and India have a strong two-way investment story to tell. Currently, the UK is the second largest G20 investor in India, with British companies having invested over $ 26 billion. In 2017 India's stock of foreign direct investment in the UK was £7.5bn - a 321 per cent increase from 2016, exhibiting the greatest growth from any country and the largest stock of Indian investment in the UK over the last decade. Since 2016, both countries have been engaged in dialogues which prioritize trade outside of a Free Trade Agreement. And one of the key initiatives is the establishment of a two-way fast track mechanism to help companies facing challenges in each other's markets. This demonstrates a recognition of the excellent investment relationship between the two countries. As things stand today, the technology sector offers the greatest opportunities to Indian companies in the UK. A UK-India Technology Partnership was one of the central aims and outcomes of Indian Prime Minister Narendra Modi's visit to the UK in April 2018. Indeed, the UK is India's second largest international research and innovation partner. The UK's natural strength in financial services combined with India's increasing appetite for digitisation, makes fintech another important sector brimming with opportunities. Artificial intelligence, blockchain, cybersecurity, life sciences and creative industries are some of the areas that offer new opportunities for collaboration and more business for Indian companies. The bilateral Tech Summit and Future Tech Festival in 2017 and 2018 respectively focused on the emerging technological potential between both the countries. Indian companies in the tech sector are unperturbed by the current political climate in the UK and Brexit. They see the UK as a stable, mature market compared to the current trade and investment environment in the USA. The UK's attractiveness as an investment destination for Indian companies is rooted in the country's domestic tax and regulatory framework and, for Indian companies at least, is not dependent on the UK's membership of the EU. The UK currently has the joint lowest statutory corporate tax rate in the G20 at 19 per cent and is hoping that its scheduled rate reductions will be lower by 2020. The most attractive thing for Indian companies investing in the UK is that they start with a level playing field. The UK does not distinguish between domestic and foreign companies, once registered at the Companies House. Open to all companies is a mature and generous research and development incentive offering. And Innovate UK has a budget to grant fund a number of innovative companies which Indian start-ups can take advantage of. As far as raising capital is concerned, London has led the world in market innovations. Indian companies are heavily invested in the UK. Indian IT giants are taking a lead in the skilling space for the UK's IT sector. Infosys' main investment focus recently has been around upskilling, with academy type initiatives looking at increasing skills such as coding. The other area of focus for them has been around smart cities.
While Wipro, another Indian IT giant, sees the UK as a growth hub and has committed to continuing investment in their London Paddington base. They've invested in what they call digital 'big bets' which support skill-building for the future in the UK. These include partnerships with Kings College London for STEM courses and major graduate and apprenticeship programmes. According to Tata Consultancy Services (TCS), access to digital skills is a key factor for companies deciding where to locate and invest, meaning investment in these skills represents a vital opportunity for UK plc in a post-Brexit world. TCS has already taken action working with the World Economic Forum to create a dedicated online platform as part of its Closing the Skills Gap Project. The platform enables businesses to make measurable commitments that address skills development for the future, but also allows them to share insights and best practices. However, companies with interests in manufacturing, components and original equipment manufacturers are somewhat concerned about tariffs coming into play in the event of a no-deal Brexit. Life sciences and pharmaceuticals, automotive and car manufacturers are also a little sceptical about what the future holds. Competing markets like those emerging in Eastern Europe may challenge the UK as suitable investment destinations for these sectors. As Prime Minister Modi has said, the UK and India are an 'unbeatable combination'. The future presents great opportunities to walk the talk. Ties built in the past have grown stronger in the present, and as the UK proceeds to exit the European Union, there are opportunities to make these bonds even stronger. Shehla Hasan is the India Director for CBI (Confederation of British Industry).