India-UK Trade: Strengthening Ties and Future Prospects

Sansad TV

India-UK Trade

India and the United Kingdom share a long history of strong ties, making the UK one of India’s most vital trading partners. This relationship is characterized by mutual investment, close economic engagement, and strategic collaboration. In this article, we delve into the multifaceted aspects of India-UK trade, highlighting its significance and future prospects.

Historical Bonds

The historical connection between India and the UK provides a solid foundation for their current trade relations. Over 1.5 million persons of Indian origin reside in Britain, with 15 of them serving as Members of Parliament and three in the Cabinet, including key roles like Finance and Home Ministers. This demographic bridge helps foster understanding and cooperation between the two nations.

Before the COVID-19 pandemic, half a million Indian tourists visited Britain annually, with a similar number traveling in the opposite direction. Additionally, despite limited post-graduation employment opportunities, around 35,000 Indian students choose to study in Britain, contributing to educational and cultural exchanges.

Investment and Job Creation

Both India and the UK are major investors in each other’s economies, with Britain being among the top investors in India. India, on the other hand, stands as the second-largest investor in the UK, significantly contributing to job creation in Britain. This economic interdependence forms a strong basis for further collaboration.

Strategic Partnership

The UK’s status as a permanent member of the UN Security Council makes it a strategic partner for India on the global stage. Closer trade ties can translate into increased cooperation in addressing shared challenges such as the standoff with China in the Ladakh sector and India’s pursuit of a permanent seat at the UNSC.

Brexit and Bilateral Trade

The UK’s decision to exit the European Union (EU) in January 2020 has led to increased interest in bilateral trade arrangements. India had initially resisted such efforts, wanting to await the completion of the Brexit process. The key concern for India is to understand the extent of preferential access the UK will have to the European market once detached from the EU.

Challenges and Opportunities

India’s negotiations with the EU for a trade agreement faced challenges, largely due to differences in priorities. The post-Brexit scenario may present similar obstacles, particularly since both countries primarily deal in services. India emphasizes country-of-origin criteria and value addition in exports, while the UK cites its new points-based immigration system.

Future Prospects

India, as one of the world’s fastest-growing economies, values its trade relationship with the UK. However, policymakers believe that previous FTAs have not yielded the expected benefits and have even negatively impacted the manufacturing sector due to liberal rules of origin. Therefore, there is a growing need for stakeholders to assess these FTAs in terms of goods, services, and investment flows.


The India-UK trade relationship holds immense promise and could become one of the defining partnerships of the 21st Century. Strengthening economic ties, strategic collaboration, and addressing the challenges posed by Brexit are crucial steps toward realizing this potential. As these two nations continue to evolve, their dynamic relationship will play a pivotal role in shaping the future of global trade and diplomacy.