The deepening of economic bond between India, UK
As the world faces the economic fallout of the Covid-19 pandemic, it has never been more important for countries to come together — not just to recover, but to build back better and stronger. The United Kingdom (UK) and India are leading the charge. Our governments have just announced a series of initiatives across investment, trade, infrastructure and sustainable finance to drive growth and jobs for both countries.
On October 28, UK’s Chancellor of the Exchequer, Rishi Sunak, and finance minister, Nirmala Sitharaman, held the landmark 10th India-UK Economic and Financial Dialogue (EFD), supported by regulators and senior industry leaders from both countries. It was a timely moment to look at future challenges, and also to reflect on progress: Since the first EFD in 2007, trade between the UK and India has more than doubled to nearly £24 billion in
2019. Our investment relationship now supports over half a million jobs in each other’s economies. The combined revenue of Indian companies in the UK has grown by 87% in the last five years. The UK is the second fastest growing G20 investor in India over the last 10 years; since 2000, British companies have invested nearly £22 billion. The UK is India’s second biggest research partner. It is easy to reel off figures, but these bear repeating — what they represent is truly impressive.
The chancellor is well aware of the opportunities that the UK-India partnership presents, especially as the UK prepares for its G7 and COP-26 presidencies next year, and India hosts the G20 Summit in 2022. The UK and India are leading the global economic response to Covid-19, as co-authors of the G20 Action Plan. The ministers restated their commitment to work together as a force for good — in a relationship fit for the 21st century — not just with words, but with tangible action. We agreed an ambitious new partnership to share expertise on infrastructure finance and project delivery and another to scale up our cooperation on sustainable finance, to mobilise even greater green investment. As the need for building a resilient world becomes increasingly urgent, sustainable finance has particularly exciting potential. Our joint UK-India Green Growth Equity Fund, for example — announced at the last EFD — has already catalysed nearly £300m of investment to support green infrastructure projects in India. What does that mean in practice? Innovative companies, who know how to build in a sustainable way, now have access to reliable finance to grow their business and help clean up our world.
We now have a chance to deepen this further — and the October 28 dialogue set the scene perfectly. As the world’s leading global financial centre, London is the perfect partner for New Delhi’s ambitious growth plans — including the delivery of India’s $1.5-trillion national infrastructure pipeline. Indian firms have raised £11.5 billion in masala, dollar and green bonds listed on the London Stock Exchange since 2016. A new strategic partnership on Gujarat International Finance Tec-City will accelerate the development of Prime Minister Narendra Modi’s flagship international financial centre by sharing world-class UK regulatory expertise. Through our FinTech ties, the UK and India will aim to facilitate the flow of faster and cheaper remittances. And through a new financial markets dialogue, the chancellor and finance minister Sitharaman agreed to address regulatory barriers and enable the free flow of capital between the UK and India. The opportunities are huge — for example, in insurance where the ministers have agreed to explore ways to boost investment further.
Through this raft of new initiatives and so much more besides — including joint investment of up to £8 million to lead pioneering research on Covid-19 — the UK and India are truly setting out a stretching economic agenda. One that I am confident will set us up for another prosperous 10 years — and for a 21st century partnership which leads the way on global recovery. After all, the stakes are high — but so is our ambition.