British Companies Eye India’s Growing Consumer Market and Skilled Workforce

Most British firms are eyeing the Free Trade Agreement (FTA) with India as a business game-changer to scale up their business. New data in a report indicate that British firms are fast-moving to invest and scale up business in India. Those who do not have an existing footprint in India are planning to enter the Indian market in the next few months.

According to Grant Thornton's latest International Business Report (IBR), 72 percent of British companies have identified India as a key market for international growth this year. This figure is significantly higher than last year's 61 percent, indicating that India has now become a key part of British companies' global strategy.

According to the report, only 28 percent of British companies are currently active in India, but 73 percent of them plan to start business here in the next few years, even without an existing presence. Of these, 13 percent are preparing to enter the Indian market within the next 12 months.

The Comprehensive Economic and Trade Agreement (CETA) between India and the UK was signed during Prime Minister Narendra Modi's visit to the UK in July this year. Once ratified by the British Parliament, the agreement is expected to significantly boost bilateral trade relations worth £44.1 billion. The report states that this FTA will reduce barriers to trade entry, reduce operating costs, and facilitate the exchange of talent and technology between the two countries.

Anuj Chande, Head of the South Asia Business Group at Grant Thornton UK, said, "The change we are seeing is clear: British mid-market companies are no longer asking 'why India,' but rather, 'how soon to enter India.'" He stated that India's vast consumer potential, skilled human resources, and rapidly growing economy are making it a major investment destination. The report stated that 65 percent of companies cited India's rapid economic growth as a factor in their attraction, while 60 percent cited the country's large consumer market as the primary reason.

According to the report, 79 percent of British companies agreed that free trade agreements encourage investment and support business growth. The India-UK FTA will take cooperation to new heights in areas such as IT, finance, consulting, innovation, digital governance, and sustainable development. Grant Thornton also stated that the recent visit of the British business delegation to Mumbai, led by Prime Minister Keir Starmer, will further strengthen this partnership.

According to Grant Thornton's annual 'Britain Meets India' report, 667 British companies are currently active in India, generating revenues of approximately £47.5 billion and employing over 516,000 people**. The report stated that companies expanding into India are now focusing on long-term partnerships, local understanding, and customization.

The report also acknowledged that the Indian market presents many challenges alongside opportunities. 63 percent of companies cited regulatory complexities and foreign exchange controls as major obstacles, while 38 percent cited a lack of infrastructure and a fragmented market structure as major challenges. However, the pace of business expansion in India clearly demonstrates British companies' willingness to turn these difficulties into opportunities.

The report also highlighted tremendous enthusiasm from Indian companies for investing in the UK. 99 percent of Indian companies already present in the UK are looking to expand their operations, while 90 percent of companies that do not currently have a presence are planning to open a branch in the UK in the near future.