Mid-market firms in the UK see India as a key market for expansion, but success demands more than just ambition.
Setting up operations in India has moved from a long-term aspiration to an immediate priority for UK mid-market businesses. According to our latest International Business Report (IBR)* survey, 72% of UK firms identified India as a key market for international growth, up from 61% last year.
While only 28% of the businesses surveyed currently have operations in India, this gap is narrowing swiftly. Among those yet to enter the market, 73% plan to establish operations, with 13% targeting the next 12 months and 29% within two years. The Britain Meets India 2024 report shows that there are 667 UK-headquartered firms operating in India, generating £47.5 billion in revenue and employing over 516,000 people. For firms already doing business in India, the focus has shifted from entry to expansion: 96% plan to scale up their India operations, with 52% aiming to do so within the next year.
This ambition is mirrored by Indian businesses. Among those with a UK presence, 99% plan to expand, with 69% expecting to do so within the next 12 months. Even among Indian firms not yet operating in the UK, nearly 90% express a desire to establish a base, reflecting a surge in bilateral confidence and collaboration.
of UK businesses recognise India as a focus market for business expansion
of Indian businesses recognise the UK as a focus market for business expansion
What’s drawing UK businesses to India?
India’s growing attractiveness for UK businesses stems from a compelling combination of scale, talent, and economic momentum. The IBR survey findings show that 65% of firms cited India’s rapidly expanding economy, while 60% pointed to its vast consumer base as key drivers of interest. For companies considering exports to India, the market presents both significant scale and a valuable opportunity to diversify and future-proof global operations.
Talent access is a major draw, with 53% of respondents highlighting the benefits of India’s large, skilled workforce, particularly in sectors like technology, consulting, and professional services. Digital competitiveness (47%) and improving ease of doing business (45%) further enhance India’s attractiveness. While cost advantages (39%) remain relevant, today’s investment decisions are increasingly driven by India’s innovation ecosystem and evolving business-friendly environment.
UK-India Free Trade Agreement: a catalyst for deeper engagement
The recently signed UK–India Free Trade Agreement (FTA) has further accelerated business interest. Around 75% of UK firms surveyed indicated that the FTA will encourage them to explore additional opportunities in India. The agreement is expected to streamline the process of establishing operations, lower operating costs, and facilitate the smooth movement of talent across borders.
A strong 79% of UK businesses surveyed agreed that FTAs play a key role in driving investment and supporting business growth. But this agreement goes beyond trade in goods and services. The FTA is also designed to promote collaboration in innovation, sustainability, and digital governance – areas where UK firms already have significant capabilities and India offers potential for scale.
Key benefits of the FTA for UK businesses
Easier market access and fewer trade barriers in India
Tariff reductions and cost savings
Improved ease of movement for professionals and the workforce
Barriers persist, but mindsets are shifting
Despite the optimism, businesses are realistic about what's ahead. Regulatory challenges remain the top barrier, cited by 63% of respondents, while infrastructure limitations and the complexity of India's fragmented market landscape are also key concerns. With policies and business practices varying by state, many companies understand that a 'one-size-fits-all' approach won’t work.
Indian businesses looking to expand into the UK face different but equally significant challenges, from protectionist policies to regulatory hurdles. Though less pronounced than in India, the fragmented nature of regulatory compliance in the UK market was identified as a concern by all Indian businesses surveyed.
Key barriers for UK firms investing in India:
Key barriers for Indian firms investing in the UK:
These insights reflect a common theme: while bilateral interest is strong, businesses on both sides need smoother, more aligned regulatory frameworks to unlock the full potential of UK–India trade and investment. However, it’s important to note that these challenges are no longer seen as deal-breakers. 21% of UK businesses surveyed said they have no concerns about the FTA and view it as wholly beneficial. Businesses increasingly consider these barriers manageable risks requiring the right strategy, local partnerships, and expert support.
From interest to impact
UK firms are making it clear: India is a priority market for growth and investment. The intent to invest is strong and the UK–India FTA provides a more streamlined entry framework. But success isn't guaranteed. It requires a deliberate, well-informed approach that takes into account regulatory intricacies, operational hurdles, and cultural nuances.
At Grant Thornton, we help clients navigate India’s regulatory challenges, design tailored Indian-market entry strategies and build scalable operations. Our India Investment Roadmap helps UK businesses navigate the regulatory challenges while opening new avenues for growth through legal and tax guidance, market insights, and tailored entry strategies.
If you're looking for a partner who can help you negotiate the current barriers to expanding into India and prepare you for the opportunities that the FTA will bring, contact Anuj Chande.
*The Grant Thornton International Business Report (IBR) interviews senior executives within mid-market organisations who are operating internationally, from all industry sectors. This research is from 305 businesses in the UK and 166 businesses in India.
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