Business opportunities for UK to venture into India in 2024

The UK-India relationship traces its roots to the early 1700s, boasting a rich historical story. Business ties between these two nations are far from recent and go back to the era of the East India Company, founded and established by our ancestors. British merchants, deeply involved in India’s spice trade, drove the expansion of English commerce, catalyzed by the East India Company. India, a fertile ground for enterprise, facilitated the growth of British interests across diverse sectors—spices, cotton, silk, indigo, and beyond. This long-lasting partnership has witnessed India’s constant support, offering resources and manpower since time immemorial.

Building onto that, today, we lay out the evolution of this business alliance, exploring how both countries capitalize on their shared history and resources to strengthen their roles as mutual economic pillars.

The foundation of UK India business ties 

Trade relations between India and the UK have been on a steady upward trajectory, as evidenced by Chancellor of the Exchequer Jeremy Hunt’s visit to the 12th Economic and Financial Dialogue in India on September 11, 2023. This visit served to enhance economic dialogue and explore avenues for deeper collaboration across various sectors. The discussions held during the G20 Trade Ministers’ meeting highlighted the mutual recognition of opportunities for further cooperation and growth of UK India.

India’s recent economic reforms have significantly improved its attractiveness as a destination for foreign investments. Bilateral trade agreements and diplomatic efforts have facilitated increased participation of UK businesses in the Indian market, fostering an environment conducive to growth and expansion. The bilateral trade between India and the UK surged to £36.3 billion in the fiscal year 2022/23, representing a remarkable 34.2% increase from the previous fiscal year.

India has emerged as the UK’s 12th largest trading partner, accounting for 2.1% of the UK’s total trade. The initiation of the Free Trade Agreement (FTA) negotiations between the two countries at the Joint Economic Trade Committee (JETCO) meeting on 12-15 January 2022 marked a significant milestone in their economic relationship. Moreover, India’s Department for Business and Trade’s investment in 118 projects created 8,384 new jobs in the UK, solidifying its position as the second-largest source of foreign direct investment after the US.

India holds a prominent and increasingly significant position in the business and trade relationship with the UK, characterized by mutual respect, collaboration, and shared economic goals.

The present UK business landscape in India

The UK companies have a strong presence in India across diverse service sectors. It’s also the 6th largest investor in India for the past two decades, with a massive investment of USD 34,513.58 million in FDI inflows. UK companies have made significant progress in finance, technology, education, and healthcare. Presently, there are 635 UK companies in India, generating a total turnover of approximately USD 48.8 billion and employing around 666,992 people as of 2023. With the rise of digital transformation and the growing demand for specialized services, UK firms have

found a welcoming market in India. The consumer market in India increasingly prefers British goods and services, especially in the luxury and lifestyle sectors. Responding to this demand, Reliance Brands Ltd. (RBL) has partnered with UK food giant Pret A Manger to introduce the food chain in major Indian cities. Additionally, the demand for high-quality education, healthcare, and financial services has created opportunities for UK companies to establish themselves as reliable providers in India. Consequently, various corporate giants like Tesco, Claranet, Gallagher Re, and others have either established or are planning to establish their presence in Indian cybercities such as Bengaluru, Hyderabad, and Pune.

Why should UK businesses focus on the market in India?

Several factors contribute to India’s appeal for UK companies seeking international expansion. First, the size of the market in India is large and provides ample opportunities for growth due to its vast consumer base. Additionally, the government’s ongoing efforts to develop infrastructure have positioned India as a prime location for UK corporates’ Global Capability Centres (GCCs). The expanding Indian middle class, projected to reach 250 million by 2050, translates to increased purchasing power and a rising demand for quality goods and services.

Moreover, India’s strategic geographical location serves as a gateway to other emerging Asian markets, enabling UK companies to expand regionally and globally by establishing a presence in the country. The Indian government’s business-friendly reforms, including the Goods and Services Tax (GST) and the ‘Make in India’ initiative, have simplified processes and reduced bureaucratic obstacles, enhancing the ease of doing business in India and making it an appealing destination for foreign investments.

Key areas of interest for UK investors in India

While opportunities abound across various sectors, certain industries stand out as particularly promising for UK companies looking to venture into India.

• Technology and innovation: India has emerged as a global technology hub, and UK firms that focus on IT, artificial intelligence, and innovation find a receptive market there. In the financial year 2022, more than 17,000 startups and small businesses employed in this field, with digital technology being the fastest-growing area, growing at a rate of 30%. So, teaming up with Indian tech firms can result in partnerships that benefit both sides and help create advanced solutions.
• Renewable energy: India’s emphasis on sustainable development offers chances for UK firms in renewable energy. According to the REN21 Renewables 2022 Global Status Report, India ranks fourth globally in solar power capacity. It boasts 50 solar parks with a total capacity of 37.9 GW spread across 12 states as of October 2023. Therefore, the Indian government’s dedication to boosting renewable energy presents opportunities for teamwork, especially in the solar and wind power sectors.
• Healthcare and pharmaceuticals: The healthcare sector in India is changing quickly, focusing more on better healthcare services. India has some impressive stats in medicine, like a $50 billion market size that’s predicted to reach $65 billion by 2024. It’s also the top supplier of global generic medicines, accounting for 20% of global exports. UK companies in pharmaceuticals, medical tech, and healthcare management can be part of this change and benefit from a market with growing healthcare demands.
• Education and training: India ranks fifth among nations with the highest youth demographic, with an average age of 29. This positions India with the potential to achieve a $5 trillion economy globally. Consequently, it can be asserted that the substantial youth population in India generates a need for high-quality education and skill enhancement. Educational institutions and companies from the UK, specializing in education and training, have the opportunity to play a crucial role in molding India’s workforce and contributing to the nation’s economic advancement.Learn more about how to expand your business in India through this article.
  

India’s skills and resources cast a promising prospect for UK companies

India’s pool of skilled labor and abundant resources provide a fertile ground for UK companies seeking to expand their operations. The country’s thriving tech industry, skilled workforce, and flourishing startup ecosystem offer valuable assets for collaborations and partnerships.

• Skilled workforce: India has many highly skilled professionals in different areas like information technology, engineering, and finance. The India Skills Report 2023 shows that 3.75 lakh candidates were interviewed for jobs in 150 companies across 15+ industries, indicating a growing talent pool in India. Therefore, it’s clear that working with Indian talent can add diversity and expertise to UK businesses, promoting innovation and competitiveness.
• Innovation and entrepreneurship: India’s startup scene is now known worldwide for its dynamic and innovative nature. Over the past decade, India has experienced significant growth in fostering new business concepts. In 2023 alone, the country saw the emergence of more than 122,000 tech companies. British firms have the opportunity to collaborate with Indian startups, leveraging their creativity and flexibility to fuel progress in emerging industries.
• Cost-effective operations: In India, there are more than 135 million people who speak English, making it the second-largest English-speaking workforce globally. This presents a huge opportunity for other countries to recruit talent. Moreover, UK companies find it advantageous to operate in India due to lower costs. Outsourcing some business tasks to India can save money without sacrificing quality, which appeals to businesses seeking to improve efficiency.

Conclusion 

To sum up, it can be stated that the opportunities available for UK businesses to venture into India in the year 2024 are both compelling and diverse. The strong historical ties that bind the two nations, along with the current economic landscape, contribute to making India an attractive destination for UK companies that are actively seeking avenues for growth and expansion in new markets. As both nations continue to foster collaborative efforts and explore new avenues for partnership and cooperation, the business horizons between the UK and India are poised for exciting developments and advancements in the years to come.