This article delves into the details of how India and the UK can build on a series of trade and financial relationships.
The following article comes from Mythily Katsaris (main picture), partner and head of India desk, Fladgate LLP, and Tamal Mandal (picture below), partner – dispute resolution, international trade and investment, Luthra and Luthra Law Offices India. They explore the links between the UK and India and their relevance today, particularly at a time when both countries are positioning to account for new realities. The editors are pleased to share these views and invite replies. The usual editorial disclaimers apply to opinions of outside contributors. To respond and continue the conversation, email email@example.com
While the jury may still be out on the measured effects of Brexit
on the UK economy, it is no secret that in the past few years,
the UK has witnessed an exodus of high net worth individuals. In
2022, around 1,400 HNW individuals departed the UK shores
according to a report by Henley & Partners, a citizenship
advisory firm. Adding to that, earlier in the year, an external
member of the Bank of England commented that inbound investment
had “stopped in its tracks” following the Brexit
However, not all seems lost as the others’ losses appear to be India’s gain. India prime minister Narenda Modi and former UK PM Boris Johnson’s vision in May 2021 to commit to an Enhanced Trade Partnership, with the aim of doubling trade between the fifth (India) and sixth (the UK) largest economies by 2030, was boosted with the start of the free trade agreement negotiations in January 2022 on “a priority basis.”
India and the UK share a modern partnership bound by strong historical ties. The launch of the negotiations led to Indian companies making a “significant contribution” to the UK economy. The “India meets Britain Tracker” published by Grant Thornton and the Confederation of Indian Industry (CII) identifies more than 30 fastest growing “Indian-owned corporates with operations headquartered or with a significant base in the UK, with turnover of more than £5 million ($6.12 million), year-on-year revenue growth of at least 10 per cent and a minimum two-year track record in the UK.”
A recent factsheet published by the erstwhile Department for International Trade (now the Department for Business and Trade) reveals that in 2021, there was an uptick in the inward foreign direct investment (FDI) in the UK from India which amounted to £9.3 billion. The “India meets Britain Tracker” shows that there were 900 Indian companies operating in the UK in 2022 with a total turnover of £54.4 billion and employing 141,005 people compared with 850 with a total turnover of £50.8 billion and employing 116,046 people in 2021.
On the goods side, the numbers tell the same story with India being the UK’s 12th largest trading partner accounting for 2.1 per cent of total UK trade. The total UK imports from India amounted to £19.2 billion in the four quarters to the end of Q3 2022 which was an increase of 37.3 per cent or £5.2 billion compared with the four quarters to the end of Q3 2021 as per the DIT’s factsheet.
Immigration to the UK by wealthy Indians has been on a steady increase. Indian businesses still consider the solid rule of law, relative political stability, ease of doing business and a 1.5 million strong diaspora as an asset and continue to view the UK as a preferred trade and investment destination. With India on course to become the world’s third largest economy by 2030, the country is in a position to drive global economic growth over the coming decade. This will increase the large number of Indian HNW individuals and ultra-HNW individuals that will seek to diversify their portfolios of assets and industries internationally.
The pandemic has been a big driver of what was an ongoing trend of wealthy Indians seeking to “globalise their lives and assets;” Indians have a natural affinity with the UK and a growing appetite for British assets.