Pandemic fails to slow India-UK business ties

Despite the global economic downturn caused by Covid-19, British firms continued to invest heavily in India at the height of the pandemic, according to a new report.

David Sapsted

12 November 2020

The Confederation of British Industry's (CBI) 'Sterling Access 2020 Review', which tracks the state of trade relations between India and the UK, found that British companies had been encouraged by the "significant strides" the Indian government had made over the past 12 months to reform the nation's business environment.Publication of the report came just two weeks after Chancellor of the Exchequer Rishi Sunak and the Indian Minister of Finance Nirmala Sitharamanthe agreed to strengthen collaboration on financial services and infrastructure, and pledged to work together to tackle climate change through sustainable finance.The CBI report, prepared in collaboration with EY, pointed out that Indian business reforms - aimed at boosting the nation's ranking in the World Bank’s Ease of Doing Business Index - included passing a key labour reform bill and plans for a new digital ‘one-stop shop’ for firms applying for licences, clearances and incentives given by central government and regional states.Despite trade disruptions caused by the pandemic, the report said that, in the second quarter of the year, British firms continued to invest around £140 million in India. Overall, trade between UK and India hit £24 billion in the year to March, up by nearly 12 per cent on the previous year. Meanwhile, India invested in 120 projects in the UK, creating 5,429 new jobs and making India now the second largest foreign investor in Britain, just behind the US.Lord Karan Bilimoria, CBI president, said: “The Indian government has hugely stepped up its efforts to improve the business environment this year, from accelerating the use of digital and online services in the supply chain to implementing major labour reforms.“Building back from the economic shock of Covid-19, Prime Minster Modi has made clear his ambition for India to play a bigger role in the global supply chain. In order to accomplish this further progress will need to be made, adoption of global standards, reducing technical barriers and upping the momentum on a UK-India free trade deal will be critical.“UK-India relations have remained ironclad amidst the crisis with our top universities and businesses collaborating on a covid-19 vaccine and British firms continuing to invest around £140 million across India."As the fifth and sixth largest economies and the world’s leading democracies, UK-India trade deal is a natural fit, that has the potential to bolster our two-way trading relationship across many sectors including life sciences, IT and services.”At the end of October, Mr Sunak and Mr Sitharamanthe agreed a number of measures to further boost Anglo-India trade. Agreements included:- a new UK-India Partnership on Infrastructure Policy and Financing which will help to open up infrastructure opportunities in India to UK commercial expertise and financing.- strengthening cooperation on mobilising private capital into green investment, including through a new UK-India Sustainable Finance Forum, and greening the financial system.- a fresh mandate for the industry-led India-UK Financial Partnership to explore closer financial ties in areas including FinTech.- creating a new Financial Markets Dialogue to remove regulatory and market access barriers for UK and Indian firms.- a new partnership in Gujarat International Finance Tec (GIFT) City, India’s flagship new international financial centre, which will create opportunities for UK firms.- joint investment in research collaborations worth up to £8 million to understand the impact of Covid in South Asian populations in the UK and India.The two ministers also agreed to explore ways to boost investment in insurance through an increase in India’s foreign investment limit.Mr Sunak said: "The UK’s economic and financial relationship with India has never been more important with the global challenges we face. We are committed to working together to lead the global economic recovery as we build back better after the pandemic."