UK India Business Council sees big opportunity in defence, manufacturing tie-ups with India Inc; says FTA on track

There is a lot of interest from the UK businesses in defence, advanced manufacturing, technology, digital services and education, UKIBC CEO says.

With India’s economic prospects looking bright, businesses from the United Kingdom are looking closely at the Asian giant for talent, supply chain integration and as a market, the Chief Executive Officer of the UK India Business Council said.

“In terms of whatworld's happening on the ground, in terms of the level of interest from business looking at India, I've never known a moment of more positivity in the economic relationship and flow between the two countries,” Richard McCallum told Moneycontrol in an interview.

“We think that's a very bright picture in India,” he said.

There is a lot of interest from the UK businesses in defence, advanced manufacturing, technology, digital services and education, he said. There are also areas for collaboration like robotics, artificial intelligence and green technology where the UK is among the leaders, as well as digital public infrastructure where India is a pioneer.

The UKIBC, which is planning conferences around technology and showcasing the Indian consumer to UK businesses, is also helping companies that are seeking to diversify by moving their supply chains to India, especially in manufacturing and advanced manufacturing.

“Among our companies, we see a really, really strong appetite to engage with India, whether it's from research and development, or talent, or a supply chain integration perspective. And we're helping companies right now diversifying some of the manufacturing away from markets like China to India.”

India has over the recent years focused on boosting its domestic manufacturing sector by attracting businesses that are seeking to shift away from China.

Focus on defence

Defence is an area where there is a commercial opportunity on both sides, a common geopolitical strategic narrative and huge potential, the UKIBC CEO said.

“I think there's a huge amount the UK and India can do together in defence. We understand that this is not about selling India equipment, this is about co-creating equipment in India, about co-developing, about making an India and making in India for the rest of the world eventually.”

There is a lot of interest from the UKIBC industry members about collaborating with Indian businesses, including from a group of 22 UK defence companies, he added.

India-UK FTA on track

In terms of the timing, the India-UK free trade agreement (FTA) is making good progress, McCallum said.

“The majority of chapters have been closed. I think, quite sensibly, no one's committing to any arbitrary deadlines on this,” he said.

“Business and government are optimistic, there's good political will behind it. And I think, you know, when the fifth and sixth largest economies in the world try and do an FTA, it's important to take the time to get that right, it won't always be easy.”

The UKIBC has been playing a very important role in the process by sharing with both governments what businesses want following detailed consultations.

India and the UK launched negotiations for an FTA in January 2022. The proposed pact is aimed at doubling trade between the two countries by 2030. The ninth round of negotiations for it concluded last month.

There has already been good progress on the trade front, McCallum said, citing a 45 percent jump in the year ending September. The countries are on track to double trade by the end of the decade.

Also read: Next round of talks for India-UK trade agreement to be held in June

‘Little impact of UK visa move’ 

The UK government’s recent announcement to disallow students from bringing their dependents into the country is disappointing but won’t impact overall movement into the UK, the CEO said.

“We don't think it'll affect the majority of Indians seeking to study in the UK. The post-study work visa, which has been a huge success, remains in place. There's no limit to the number of Indian students who can study in the UK. We have a large group of universities in our membership, and they all want to encourage more Indian students to study in the UK,” he added.

To lower overall migration, the UK recently said that international students can no longer bring their families – including children or elderly parents – with them. The move is expected to come into force in 2024.

At the same time, there will be some exceptions for students undertaking post-graduation courses that are deemed research programs.

“Student mobility has been a big positive development in the UK-India story,” McCallum said.

“I'm a migrant, I live in India, I work in India, I feel very strongly about this. And we need to remind all stakeholders of the benefits of student mobility,” he added.

Also read: India Renews Push for Easier Visa Norms for Its Companies in UK

To be sure, the UK is “incredibly open” to students and workers from India, McCallum said. The post-Brexit new immigration policy puts Indian nationals at par with their European Union counterparts in terms of migration. Moreover, a large chunk of the visas issued by the UK are to Indians.

An area that needs more work is bringing UK students to India, whether for summer school or semester exchange.

“Because it's really important, I think the people in the UK understand the changes that are happening in India and get a sense of how relevant and how important this market is going to be in their lives.”