India: The UK business opportunity
With a growing population of increasingly wealthy and aspirational workers, India is rapidly transforming into an economic powerhouse and an exciting opportunity for UK SMEs, explains Harjinder Kang, His Majesty’s Trade Commissioner for South Asia & Deputy High Commissioner for Western India.
Even if you think you know India, you probably need to think again. And if you haven’t visited the country recently, you really haven’t been. India has changed dramatically, shifting from a relatively poor agricultural economy to a vibrant and wealthier service-driven industrialised economy. It’s a transformation that is underpinning a tremendous investment opportunity for UK business.
The numbers speak for themselves. In 2021, India’s GDP overtook our own,1 and it is projected to become the world’s third largest economy by 2035.2 This will see its demand for international goods and services grow (in real terms) from £0.6tn in 2021 to £1.4tn by 2035.3 India is now in ‘pole position' as a major world economy with an economic growth rate that the International Monetary Fund forecasts at 6.3% (in real terms) each year from 2023 to 2028.4 If you’re looking for the next big thing, it’s India.
What’s driving this opportunity? Firstly, the sheer size of the country—1.4bn people, or around 18 per cent of the world’s population5. That’s a massive, broad, and varied market that no business with international aspirations can afford to ignore. And crucially, it’s a young population: 60 per cent of Indians are under 35 years old6 and highly motivated to improve their lives.
And India’s Netflix Generation is just the same as those in the UK and US, sharing the same motivations, aspirations, and desires. The University of Mumbai has around 700,000 students,7 training to be doctors, teachers, lawyers, engineers, IT professionals, and more. This young, thriving, and achieving demographic is growing wealthier. With about half the nation’s GDP now service driven,8 and by global metrics India’s middle class could reach around 95mn by 2035.9 That’s a population larger than the size of Britain who can afford our goods and services, and that have an affection for British brands.
India has a real appreciation for UK goods and services. We are perceived as bringing innovation and quality to the marketplace in a way that, at the moment, the local market isn’t seen to match. There is a desire, even a preference, for UK goods and services, demonstrated by the success of British high street brands like Marks & Spencer, Pret A Manger, and Body Shop, as well as SMEs including the quintessentially British gentleman’s barber experience of Truefitt and Hill. Our shared language, legal system, culture, and outlook gives UK businesses a crucial edge over competitors entering the Indian market.
Beyond its population and demographic, India needs what the UK has to offer. As the country’s infrastructure is actively developed, there is a gap that UK SMEs are well placed to fill. Whether its healthcare, education, air travel, automotive, energy, sustainability, advanced manufacturing, technology, finance, or a raft of other goods and services that developing economies need, what India wants are things that we do and do well.
So, what’s holding us back? I think it’s the UK’s outdated perception of India. When we think of Mumbai, we don’t think of the high-tech Silicon Valley style city with a Manhattan skyline and a London lifestyle. And that’s also true of Delhi, Bangalore, Chennai, Pune, and others. Then there are the dozens of tier-two cities that have increasingly affluent and aspirational populations keen to be discovered by ‘western’ businesses. It’s an incredible opportunity.
And the historic challenges of doing business in India are getting simpler. No-one can say that the complexities have completely gone away. But they are now much easier to navigate and avoid. This is partly because the Indian government is actively removing obstacles to make it easier to operate in India, from sweeping tax reforms to the National Single Window system that delivers a user-friendly approach to documentation and regulatory alignment. Over 60 per cent of UKIBC members said it was getting easier to do business with India:10 the driver for all this is that India wants us to trade with them.
I think the key to success in the Indian market is understanding: understanding that India is a huge opportunity; that this burgeoning economy wants what we can offer; that while India has its quirks and challenges, when you understand its ways they are not as daunting as they seem; and understanding that India is a slow burn that requires time and patience—but it’s worth it. Again, the proof is in the numbers: potentially a quarter billion strong middle class by 2050.11 In the UK, we have an edge, but we need to use that edge to our advantage: if we ignore India, we’re ignoring the largest opportunity we have for international trade.
