UK and India trade: businesses see benefits – and potential barriers
Mid-market businesses in both countries view the other as a significant area for growth
In a recent survey*, the majority of UK and Indian businesses agreed that the other market is a focus growth area for them. What is most attractive about the possibility of closer ties and what’s standing in the way?
It seems that businesses in each country are aware of the benefits afforded by the other. For UK businesses looking to establish a presence in India, factors such as the rapidly expanding stable economy and access to a large consumer market emerged as pivotal drivers.
The potential for growth
A free trade agreement (FTA) between India and the UK is an enormous opportunity for both countries. India is already a large market for UK goods and services, and it’s a large and growing source of both talent and investment for the UK.
72% of UK businesses and 90% of Indian businesses said they understood the benefits of the proposed FTA. These statistics underscore the potential for growth opportunities between the two countries. They also signal a promising future for bilateral trade and investment, especially if an FTA were to be agreed.
Obstacles to investing
In addition to the prospect of increased growth, and the substantial opportunities for market expansion, the research also unearthed notable barriers impeding investment across the UK-India corridor.
The biggest barriers cited by UK businesses to doing business in India were ease of doing business (36%), regulation and foreign exchange control (32%) and infrastructure (32%).
The biggest barriers for Indian businesses to doing business in the UK were high cost of doing business (52%), high cost of regulatory compliance (48%), and immigration policies and visas (42%).
Reasons for optimism
While they differed on the details, both sets of respondents highlighted noteworthy barriers to doing business in the other country focusing on ease of doing business, regulatory compliance, and high costs. These are the sorts of issues that an FTA would help to alleviate, further indicating that the successful negotiation of an FTA could open up significant growth opportunities for both countries.
We have operated in the corridor between the UK and India for decades. Our annual India meets Britain Tracker measures the growing scale of Indian investment into the UK as well as monitoring the fastest-growing Indian-owned companies and employers. In 2024, the eleventh edition saw a host of records being broken by Indian-owned businesses in the UK, from the size of their workforce to their combined turnover and the number of them growing at 10% or more a year.
If you're looking for a partner who can help you negotiate the current barriers for expanding into India, and prepare you for the opportunities that an FTA will bring, contact Anuj Chande.
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*Our International Business Report (IBR) is the world’s leading survey of mid-market companies. It provides insight into the views and expectations of around 100,000 businesses in 28 countries. In 2024 we used it to focus on the sentiments of businesses in the UK and India about each other’s markets.