UK mid-market sets sights on further India expansion
In spite of mounting human rights concerns relating to India’s incumbent nationalist government, UK businesses are clamouring to get tap into the country’s market. A new study suggests that of mid-market firms looking to invest in international expansion, almost three-quarters see India as a top priority.
India is seen as a major economic opportunity by many business leaders. The country’s GDP is anticipated to expand by 6.5% in the current fiscal year, despite risks emerging from a global slowdown – and its huge population of 1.4 billion people, alongside its historically low income economy, means there is plenty of room for further wealth creation in the coming years.
At the same time, the country’s geo-political positioning seems to have boosted its standing – with both the US and Britain viewing it as a counterweight against the growing economic influence of China across Asia. This has seen India also benefit from the US and UK both trying to underscore their strategic alliance with business ties – meaning investing in India now looks likely to pay off for firms on multiple levels.
To that end, a growing number of UK businesses are looking to India, to boost their own growth ambitions in the coming months. With economies continuing to stagnate across Europe, 36% of 608 mid-sized businesses Grant Thornton polled said they were investing in international expansion over the next six months.
Of that, 73% of respondents identified India as a focus international growth market. As negotiations around a UK-India free trade agreement progress, those numbers are likely to grow – especially as firms hear of competitors already thriving in the market.
Grant Thornton found that the UK’s mid-market is already very familiar with doing business in India. A 64% majority of those surveyed said they already have a business presence established in the growing economy, while 94% of those firms have plans to grow that presence – mostly in the next two years – amid suggestions rates of UK-India trade could double before 2030.
Free Trade Agreement
Since the advent of Brexit, the UK government has been working to strike new trade deals with growing international markets – in the hope of replacing the market share it has lost by exiting the European Union. In particular, India is seen as a crucial target for a Free Trade Agreement (FTA). Grant Thornton itself has been moving to take advantage of these changes, recently drawing up plans to invest millions of pounds in its Indian sister firm.
Anuj Chande, head of the South Asia business group at Grant Thornton UK, said, “India is now the fifth largest economy in the world and is predicted to become the third largest by 2030. It therefore presents a huge opportunity for growth for businesses in the UK. The UK-India Free Trade Agreement should also help propel the relationship between the two countries further, reducing tariffs and duties to allow for a more level playing field for overseas businesses and give greater access to a large and fast-growing market. It should also allow for the relaxation of certain regulations and help improve the ease with which businesses in the UK can look to do business within India.”
Some critics are wary of the warm backing India’s government is receiving from businesses and governments, though. In a rush to find ways of undermining China’s regional power, it has been suggested that leaders are glossing over Prime Minister Narendra Modi’s right-wing government – which is alleged to have created a hostile environment for the country’s minorities, particularly Muslims, while looking to silence dissent. Recently this saw members of the US Senate and House of Representatives sign a letter to President Joe Biden, ahead of his meeting with Modi, calling on the US President to bring up his targeting of civil society organisations, growing restrictions on press freedoms and internet access in discussions.
