Conference Presentation, Panel
Will EU Departure Strengthen Ties Between the UK and India?
Milken InstituteSimon Long, Jitesh Gadhia, Mohit Joshi, Rain Newton-Smith, Manish Singh, Richard Templar, Matt McGrath
- India's economic reform agenda is accelerating under Prime Minister Modi's second parliamentary term, with a specific target to improve the World Bank's ease of doing business ranking from 130th to 50th by 2018, though this target faces potential misses due to the slow pace of civil service reform involving senior officials currently in their 60s.
- The UK is positioning India as a priority relationship post-Brexit, with both nations agreeing to an audit on trade liberalization and exploring a bilateral vehicle with India's National Investment and Infrastructure Fund, while acknowledging that the EU-India FTA negotiation has been stalled since 2007.
- Financial sector collaboration is expected to focus on developing India's bond market to reduce funding costs and utilizing English contract law, a move that could significantly aid capital market development given India's 137th global ranking on bankruptcy compared to the UK's 18th.
- Trade in services, particularly financial services, insurance, and cybersecurity, is viewed as a major opportunity, supported by the issuance of 32 masala bonds totaling approximately $4 billion since the Prime Minister's visit to London.
- The UK aims to balance migration goals with economic needs, projecting a net migration figure of 335,000 and a "fewer numbers, higher skills" approach, despite tier two visa thresholds rising from roughly £34,000 to £41,000 and other compensation requirements increasing by over 50% in five years.
- Corporate entities like Infosys, which generates approximately $1 billion in annual revenue from the UK, plan to expand operations in the north of England while simultaneously moving specific trading and sales roles to Dublin and Amsterdam to comply with Brexit-related regulatory shifts.
- Global economic demographics over the next 10 to 20 years are expected to be defined by the rising Asian middle class, with India playing a central role in growth areas such as healthcare, financial services, and higher education where the UK holds a comparative advantage.
- Infrastructure and technology initiatives, including the JAM program which facilitated 255 million bank accounts, and the push for a low-carbon economy, present significant opportunities for international cooperation, though India faces challenges in avoiding foreign currency debt and accelerating nuclear plant construction compared to China.
- Strategic trade negotiations will likely prioritize the US, China, and India over the next decade, with the UK constrained by practical capacity to conduct no more than four or five parallel trade discussions, focusing initially on deals that yield results within a reasonable timeframe.
- Specific visa concerns for the software services industry remain manageable, with only around 3,000 tier two visas requested annually, contrasting with narratives suggesting much higher numbers, while the UK maintains no limits on bona fide Indian students at authorized institutions.