Context: India – UK relationship and its future prospects.
More in news:
- London Tech week (10th – 14th June 2019) is a series of events celebrating India-UK relationship.
- Next week, there is annual meeting of Joint Economic and Trade Committee (JETCO).
Relationship between India and UK in recent times:
- Economy Engagement: To support the Startup India initiative, UK will be investing £160 million across 75 start-up enterprises, apart from an additional £20million for a Start-Up India Venture Capital Fund. State Bank of India (SBI) launched India’s first bond index series for overseas investors at the London Stock Exchange (LSE) in September 2017
- Trade:Despite the continuing global economic slowdown, the India-UK trade has been growing. According to the data published by the Department of Commerce, New Delhi, two-way merchandise trade during 2011-12 stood at US$16.19bn, surpassing the USD12.537 billion in 2010-11, registering a growth of about 29%.
- Investment:UK is the single largest investor among the G20 countries in India. UK is the 4th largest inward investor in India, after Mauritius, Singapore and Japan with a cumulative equity investment of US $26.09 billion (April 2000-June 2018), accounting for around 7% of all foreign direct investment into India. India continued to be the third largest investor in the UK and emerged as the second largest international job creator with Indian companies having created over 110,000 jobs in the UK.
- Indian Community:Of Britain’s population of 62.3 million, the population of Indian origin is estimated to be around 1.8 – 2 million, equating to almost 1.8 percent of the population and contributing 6% of the country’s GDP.
- Multilateral cooperation: India and UK cooperate at the EU, G-20 and UN. UK supports India’s inclusion in UNSC as a permanent member.
- Culture: Cultural linkages between India and UK are deep and extensive, arising out of shared history between the two countries. There has been a gradual mainstreaming of Indian culture and absorption of Indian cuisine, cinema, languages, religion, philosophy, performing arts, etc. Now, Yoga is giving more impetus to the relationship.
- Defence: India’s multifaceted bilateral relationship with the UK intensified with its upgradation to a Strategic Partnership in 2004. the two countries agreed to elevate their Defence relationship by establishing capability partnerships in strategic areas. The institutionalised dialogue to discuss defence cooperation viz. Defence Consultative Group Meeting, is held annually. At all the three services level, joint exercises and wide-ranging exchanges between the three services are conducted regularly.
Areas of Concern:
- One of the most significant issues in the UK-India FTA negotiations is labour mobility. India has been asking for an ease in visa rules but the UK has been hardening its stance on the issue. The recent exclusion of India by the UK Home Office from a new list of low-risk countries with relaxed student visa rules is a case in point.
- In post-BREXIT scenario, there would be many adverse impacts on the Indian economy in general and Indian businesses in the UK in particular. The UK serves as an entry point for many Indian companies to the European market. A disorderly British exit would shut the direct access of these companies to the EU market. That may force some of the companies to relocate or shut down their businesses.
Future Prospects of strengthening India-UK relation:
- Trade deal: India sees the British exit as an opportunity to expand its trade and economic relations with the UK. A report by the Commonwealth noted that “given the slow pace of negotiations over a trade deal with the EU, Brexit provides a fresh opportunity to India to strengthen its economic relationship with the UK through an India–UK trade and investment agreement.”
- Business opportunities: Scaling up of startups in India was also identified as a potential area of collaboration. India’s incredible jump of 30 ranks in the Ease of Doing Business parameter has been lauded by the UK which itself ranks amongst the top 7 countries globally on the ease of doing business parameters. Therefore, identification of the right kinds of regulations that can be adopted from the UK for improving the business environment in India, will be an important area of collaboration between the two countries. UK companies have shown a keen interest in investing in Indian automotive clusters and in augmenting its design capabilities.
- Green Growth Equity Fund (GGEF): The UK and India launched the fund that will leverage City finance to invest in India’s growth. An initial investment of £240m from both governments will catalyse additional City finance for green projects in India and UK companies will be able to bid for infrastructure projects financed by the Fund. The Fund will invest in renewable energy, clean transportation, water and waste management in India as part of India’s flagship National Investment and Infrastructure Fund (NIIF). UK and India contributions are investments that will generate returns for each country.
- International Solar Alliance: The UK signed the Framework Agreement of the International Solar Alliance and became the 62nd signatory member country. The UK also expressed its commitment to the continued advocacy of ISAs aims and objectives.
- Research and Development: The UK and India will continue their world-leading research relationship, generating new knowledge and innovations that feed the world’s hungry (high yield crops), protect our environment (clean energy), save lives (advanced healthcare) and drive economic inclusion (digital services)
The UK–India Business Council have said in 2016 that, ‘Brexit will make the UK’s relationship with India even more important’. With global challenges affecting India very uniquely, it is opportunity for India to partner with UK, focusing on tackling universal issues like climate change, renewable energy, cyber threats and antimicrobial resistance. With the UK’s bid to host the next UN Climate Conference COP26, our legal commitment to net-zero emissions by 2050, and our membership of the International Solar Alliance, the UK and India are particularly well placed to join forces on promoting sustainable energy, and building resilient, smart cities.