UK businesses operating in India are enjoying a boom in revenue, according to new research. With a growth average of more than 36%, more firms are likely to head to the market – meaning trade from Britain to India could double by the end of the decade.
Since the advent of Brexit, multiple trade expeditions have made noises about the importance of securing a trade deal between Britain and India. However, with various sticking points on such an accord remaining, the UK and India are still negotiating a free trade agreement.
New research from Grant Thornton suggests that holding out on such a deal could end up holding back UK economic growth in the region – which is currently increasing rapidly. The firm’s annual Growth Tracker for trade between Britain and India has focused on 58 UK companies trading in the developing Asian economy – and found that collectively they are enjoying an average growth rate of 36.3%.
Despite global uncertainties, UK companies continue to view India as an attractive investment destination. And citing the evidence from Grant Thornton, it is clear why that is. The national market presents clear opportunities for the tertiary economy that Britain has reoriented to focus on in the last 30 years.
To that end, of the best performing UK companies working in India, the largest share were involved in the professional services sector. While 21% of the firms were involved in business services and consulting work, a further 9% operated in financial services.
And while 14% of firms were invested in India’s industrial sector – with lower labour costs and looser regulations attracting firms looking to outsource production there – the technology and health sectors proved just as attractive. A combined 22% of firms operated in the two spaces.
So far, there are 618 UK companies in India. Grant Thornton believes in total, these firms are investing some $31.9 billion in India, employing 4.6 million people. However, they are generating around INR 3,634.9 billion ($45.67 billion) in turnover. And with political ties between the countries having grown in recent years, the firm expects this to grow in the coming years.
One of the key highlights of the India-UK economic relationship during the period of the report was laying the groundwork for the India-UK Free Trade Agreement (FTA). This began with the visit of the then UK Secretary of State Liz Truss, in early 2021, where the countries agreed on an Enhanced Trade Partnership (ETP). With Truss now Prime Minister, it is expected that she will further flesh out a Roadmap 2030 for the economic relationship between the two countries. As an outcome of these interventions, trade between India and the UK is expected to double by 2030.
The researchers concluded, “These developments have created a sense of optimism on both sides of the India-UK corridor, with companies announcing expansion plans. While companies from India, such as TCS, Wockhardt, Infosys and HCL, have expressed their interest in investing further in the UK, companies, such as JCB, United Spirits and Ashok Leyland from the UK, are looking to further invest in India. These investments will result in significant job creation and are in line with the country’s Make in India programme.”