Overview

1. Relations between India and the United Kingdom encompass a wide range of political, economic, cultural and other dimensions. The intense and regular political dialogue at all levels has been spearheaded by an unprecedented four Prime Ministerial meetings in a space of twelve months, between October 2001 and October 2002.

2. UK has firmly emerged as India's second largest trading partner after the USA, and the largest in Europe. Trade has grown steadily since the Indo-British Partnership was formed in 1993, and has been particularly impressive in 2003. Business and industry linkages have also grown significantly. While UK remains the largest cumulative investor in India, recent years have also seen a surge of investments into the UK from India, particularly in the IT sector. India is now the second largest investor in the UK from Asia in terms of number of projects, and the eight largest overall.

3. The 'Delhi Declaration' signed by the two Prime Ministers on 6th January 2002 focuses, inter alia, on matters pertaining to bilateral trade and economic relations also. As mandated in this Declaration, the Confederation of Indian Industry (CII) and the Confederation of British Industry (CBI) held a Summit in London in July 2002, which brought together a wide cross-section of companies at the highest level of business representatives. A 10-point plan of recommendations emerged from this Summit, the principal aim of which is to double the Indo-UK bilateral trade by 2007 and strengthen the environment for foreign direct investment.

High-level Exchanges

4. A string of high-level visits over the past few years from both sides, focussed on economic and commercial matters, have also spurred bilateral interactions and economic linkages. Meetings of the India-UK Round Table have provided valuable inputs and recommendations. The India-UK Joint Working Group on Science & Technology held its fourth meeting in New Delhi in March 2004. Several Indian State governments and sector-specific industry delegations have also held extensive meetings and road shows in the UK. Business delegations from Northern Ireland now travel to India every year, as also business delegations from Wales.

    Calendar of Events 2002
    Calendar of Events 2003
    Calendar of Events 2004
    Calendar of Events 2005
    Calendar of Events 2006
    Calendar of Events 2007

5. The India-UK Round Table, a non-governmental body set up in 2000 to make recommendations on development of bilateral relations in all spheres, held its 6th Meeting under the Co-Chairmanship of Shri K. C. Pant and Lord Paul in London from 7-9 May 2003. The 7th Meeting was held in Kolkata on 10 January 2004.

Bilateral Trade

6. The UK continues to be India's second largest trading partner after the USA, and the largest in Europe. By 2000, India-UK trade in goods and services was almost �5 billion, with trade in goods totalling �3.7 billion. On account of the slowdown in the global economy, total trade in the following two years stagnated, mainly because of a fall in British exports.

7. Trade performance in 2003 has been impressive, with a strong increase of 30.6% in UK's exports to India, totalling �2.291 billion and reversing the two-year decline. India's exports to the UK also grew to �2.076 billion, an increase of 15.8%. Both figures are the highest-ever in bilateral goods trade, and the total of �4.367 billion is a 23.1% increase over 2002. This is significant, especially considering that UK's overall increase in export of goods in 2003 was only 0.7%, and expansion in goods imports was less than 0.5%. It also means that exports of goods to India now account for 1.22% of UK's total, compared to only 0.94% in 2002, and India has gone up one place to become UK's 15th most important export market. India's share in UK's total import of goods has also gone up to 0.89%, as against 0.77% in 2002.

Bilateral Merchandise Trade (in � million)

CalendarYear	UK's Exports to India	UK's Imports from India	Total Trade	India's Balance of Trade
1999	1450	1426	2876	-24
2000	2058	1651	3709	-407
2001	1797	1824	3621	+27
2002	1754	1793	3547	+39
2003	2291	2076	4367	-215

Source: UK Office of National Statistics

8. UK's main imports from India are: textiles and readymade garments, gems and jewellery, footwear, leather and leather goods, engineering goods, metal manufactures, power generating equipment, software services, pharmaceuticals, chemicals, marine products, rice, tea and other agricultural products like nuts and preserved fruits and vegetables. India's imports from the UK include: non-ferrous metals, gold, rough diamonds, power generating and telecom equipment, transport equipment, industrial machinery and chemicals.

9. Among the sectors that have been identified for focus in the sphere of bilateral trade are:- i) Goods - engineering goods, textiles, gems and jewellery, natural stone, marine products, chemicals, rice, processed foods, alcoholic beverages, non-GM produce like soya, and pharmaceuticals including complementary medicine; and ii) Services - software, biotechnology (R&D, information exchange and product development), healthcare and media.

Information Technology

10. The United Kingdom and India have emerged as major partner countries for each other in the Information Technology sector. UK companies realise the benefits of outsourcing to India, which has become the preferred global hub for software development and Business Process Outsourcing. Tie-ups between the UK and Indian IT enterprises lend the former substantial benefits not only in terms of lower costs but also in the quality and speed of marketing as well as establishing platforms for building new businesses. A large number of Indian IT companies have substantial operations in the UK. There have also often been skill shortages in the UK and Europe in the IT sector, which are filled to a substantial extent by Indian professionals. There are some fears of job losses on account of outsourcing to India, but the reality is that the UK economy is growing strongly and the employment situation, including in call centres, has never been better.

11. NASSCOM opened its UK Chapter in September 2003, the first such overseas. It also has a Memorandum of Understanding with its British counterpart trade association Intellect, and also with the Welsh Development Agency, which has now been a Platinum Sponsor of NASSCOM's Annual Conference for many years. In association with the Financial Times, NASSCOM also holds a prestigious annual conference in London on Outsourcing to India.

Biotechnology and Healthcare

12. Biotechnology has been identified as one of the main areas for enhanced cooperation. Leading Indian biotechnology companies are collaborating with clients across the UK and Europe. Astra Zeneca has established an R&D Centre in Bangalore. GlaxoSmithKline and Ranbaxy have signed an agreement for joint research and development. Industry delegations from both countries have visited each other regularly.

13. Healthcare is another potential area of cooperation. India already supplies doctors and nurses in substantial numbers for UK's National Health Service. Indian pharmaceutical companies also market their products and have even invested in production facilities in the UK. UK is also a source for medical equipment. The Indian Healthcare Federation comprising top Indian private sector healthcare organisations and super-speciality hospitals visited the UK in September 2003 to explore potential partnerships and opportunities.

Investment

FDI from the UK

14. The United Kingdom continues to be the largest cumulative investor in India, and the third largest investor post-1991. Since 1993, almost 1800 new joint ventures / foreign collaborations between Indian and UK companies have been approved, at the rate of roughly 200 every year. British investment approved by India in 2002 was $375.9 million, well below the $1.11 billion in 2001. Approved FDI in 2003 reduced further, but actual inflows in this period increased substantially. Some major UK insurance companies commenced their operations in India in 2002. Leading British oil and gas companies, including British Gas, Shell and Cairns Energy, have announced plans to expand their operations and increase their investments in India. An increasing number of British companies are moving to India for setting up IteS/BPO operations.

FDI from India

15. There has also been a surge of investments into the UK from India, which has moved into the top ten investors bracket (8th largest) in the UK in terms of number of projects, and the 2nd largest from Asia, creating a number of local jobs. Reliance Infocomm's $207 million acquisition of Flag Telecom and Wockhardt's �10.85 million acquisition of CP Pharmaceuticals were the two largest Indian investments in 2003. A majority of the other investments continue to be in the IT sector, including in an FDI pilot project in Wales which specifically sought to attract Indian companies.

16. To date, over 450 Indian companies have established resident presence in the UK, out of which more than 75% are in the IT sector. The High Commission has consciously encouraged this trend. An "India Business Group" (IBG) comprising all Indian companies in the UK, created by the Indian High Commission in December 1999, holds meetings in the High Commission on a regular basis. It brings together senior executives and professionals of Indian companies in the UK, as also leading consultants and solicitors from British firms who advise clients on doing business in India and the UK. The interactive IBG meetings discuss business-related developments, as also problems, ideas and suggestions on how to improve trade, investment and business links between India and the UK. In December 2002, three sectoral core groups were created for focussed targeting, one each on IT, Pharmaceuticals, Biotechnology & Healthcare, and Infrastructure & Finance.

Science & Technology

17. India and the UK have a long tradition of scientific links, and there are several on-going joint projects between scientists and institutes. There is an India-UK Joint Working Group on S&T, headed by Secretary (S&T) on the Indian side and the Chief Scientific Adviser to the British Government (Prof. Sir David King), which has held four meetings so far, the last being in New Delhi on 18 March 2004. The third meeting in London in July 2002 had led to an agreement to set up a joint Networking Fund, with an equal contribution from both sides. The operation of this Fund follows a 'bottom up' and 'blue skies' approach to collaborative proposals in order to eliminate constraints.

18. Several top British scientists have visited India regularly. The Royal Society, UK's premier scientific academy, celebrated an 'India Day' in London on 11 December 2002. This first-ever India Day was a showcase event celebrating the scientific links between the UK and India. There are long-standing links between the Royal Society and India. The first Indian Fellow of the Royal Society was elected in 1841, and the total number so far, which includes almost all the greatest Indian scientific luminaries and Nobel Prize winners, is 30. In 1972, an agreement was established between the Royal Society and the Indian National Science Academy. Since then, over 400 British scientists have visited India and 500 Indian scientists have visited the UK.

Indian Community in the UK

19. Bilateral trade and economic relations are doubtlessly facilitated by the presence of about 1.2 million strong Indian community in the UK, which represents the single largest ethnic segment of the country's population (1.5%). Contribution of NRIs in the UK has been notable from the economic point of view, especially in the fields of industry, medicine, accountancy, law, management, financial services and food. 40% of the pharmaceutical trade of the UK is run by Indians who are also the mainstay of several other retail trades in the country. Some figures are pertinent here - the 'curry industry' in Britain, that includes Indian restaurants and the ancillary food industry, employs more people than shipbuilding, steel and coal mining put together. Out of every pound spent on food in the UK, 30 pence is spent on curry.