In the recently-conducted UK elections, the Labour party, under the leadership of Keir Starmer, won the people’s mandate and ousted the Conservative party.
Starmer had pledged to pursue a “new strategic partnership” with India, including a free-trade agreement (FTA), if elected to power.
An FTA is anticipated to provide UK exporters a significant price advantage in the Indian market.
The FTA negotiations, which began in January 2022, have reportedly closed up to 19 of the 26 proposed chapters in the FTA.
The UK accounted for $9.3 billion worth of India’s exports in the four quarters ended March 2019. This figure increased to $13 billion across the same period ending March 2024.
Exports were $1.8 billion more than imports as of 2018-19. This increased to $4.5 billion in 2023-24.
India remains the second largest source of foreign direct investment (FDI) to the UK after the US. As of June 20, the overseas direct investment (ODI) from India to the UK has touched $265 million in the financial year 2024-25(FY25).
FDI (equity) flows into India from the UK have largely been stagnant in the last few years, shows data from the Department for Promotion of Industry and Internal Trade and Department of Economic Affairs.
India overtook the UK to become the fifth-largest economy in the last quarter of 2021.
India’s per capita gross domestic product (GDP) is $2,484.8 as of 2023 compared to the UK’s $48,866.6.
In June, the Confederation of Indian Industry (CII) and the High Commission of India in the UK launched a report titled, ‘Indian assets: Charting the journeys of Indian companies in the UK.’ It highlighted the Indian states’ contribution to FDI in the UK.
Most of the investing companies into the UK were from Maharashtra, followed by Karnataka and Delhi.
Other states include Haryana, West Bengal, Gujarat and Kerala.
According to the report, India became the top market for FDI into London, for the first time, in 2023. It accounted for nearly a third of the FDI into the city.
Labour has pledged to reduce net migration and with policies outlined to achieve this goal. It expects to bring net migration down to a few hundred thousand per year, according to earlier news reports.
This comes even as Indian immigration to the UK has been on the rise. It came in at 251,000 in 2023 compared to 72,000 in 2019, before Covid.
The year 2023 was also the first time since the pandemic when the majority moved to work rather than study in the country.
First Published: Jul 05 2024 | 9:22 PM IS