By Shehla Hasan, CBI Head of Group – India & South Asia
India and the United Kingdom share a contemporary partnership fashioned by historical ties. There has been significant bilateral cooperation over the years from trade and investment to security and climate change.
As the UK begins to control its own independent trade policy for the first time in over 40 years. We have the dual challenge of re-casting our role with our partners internationally whilst levelling up prosperity locally across Britain.
Businesses are looking at the glass half-full. The UK has a real opportunity to create sustainable, inclusive jobs, rebuilding from covid and place itself at the fore of free trade on the international stage, as it heads up both the G7 and COP26 later this year. The extension of the G7 invitation by the UK to Prime Minister Modi signals the closeness of our two countries and is a real sign India is too playing a bigger role in tackling global challenges.
The UK-India economic relationship is integral to this. Right now, there are over 800 Indian companies in the UK contributing nearly £50 billion to the economy and employing hundreds of thousands of people across the country. And in India, there are hundreds of British businesses employing 450,000 people both directly and indirectly. The CBI’s latest report Sterling Access showed even despite the pandemic UK businesses continued to invest around £140 million across India.
The Indian Government has hugely stepped up its efforts to improve the business environment this year, from accelerating the use of digital and online services in the supply chain to implementing major labour reforms. And for the first time, foreign universities are being permitted to set up campuses in India. While Indian universities are being encouraged to invest abroad. This in turn is unlocking a new era of partnership in science and research and development. And we know what game-changing innovation this can deliver, just look at the Oxford University-Astra Zeneca Covid vaccine of which one billion is being manufactured by India’s Serum Institute.
This is also an exciting phase for UK and India trading relationship, as the fifth and sixth largest economies and the world’s leading democracies, UK-India trade deal is a natural fit, that has the potential to bolster our two-way trading relationship across many sectors including life sciences, IT and services.
Encouraging businesses to export internationally, develop resilient supply chains, and attract high quality international investment must be core to Global Britain, but this also requires investment in domestic enablers. The UK must leverage its strong reputation for a highly skilled workforce, its innovation and world-leading education system by working in conjunction with businesses. It’s only through collaboration that the government will be able deliver on the UK’s promise as one of the world’s best and open economy. Building on our reputation as one of the world’s top three destinations for inward investment.
While free trade agreements bring in lots of benefits, there is so much more we can do beyond them. Firms continue to lose billions of pounds worth of trade each year due to market access barriers imposed by other countries. The importance of dialogue, via government established trade committees for example, is crucial, particularly in those markets where free trade agreements are not in place.
The Joint Economic Trade Committee, a G2G initiative, led by Secretary of State for International Trade (UK) and the Indian Commerce minister, have a proven track record of working towards eliminating these barriers, addressing behind-the-border issues and supporting trade.
With India and the UK having committed to negotiate an Enhanced Trade Partnership in a recent meeting, a stepping-stone towards an FTA, an exciting new phase is opening up. Both the countries are already dealing directly with each other giving businesses a reason to be optimistic in the coming months.
To fully capitalise on these opportunities, a deal must look to reduce regulatory bottlenecks, agree on mutual areas of cooperation such as in the digital economy and net-zero, while the Indian administration must continue to ramp up its ease of doing business efforts. Whilst much of this is a work-in-progress, the UK is in prime position to remain a big partner India’s future growth story.