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B20: why the UK-India partnership matters

Author: ICAEW Insights

Published: 12 Jul 2023

As the UK and India inch closer towards a free trade agreement, the spotlight is on what both nations bring to the table.

If any event demonstrates the close – and growing – relationship between the UK and India, it’s the annual UK-India Week. Last year, Rishi Sunak delivered a keynote address, months before he became Prime Minister. This year, Leader of the Opposition Sir Keir Starmer did the same. 

Starmer spoke about the need to press ‘reset’ on the relationship, breaking away from the old dynamic towards something more forward-looking. “The challenge, as I see it now, is for Britain to step out of the shadows in its mind, to cast aside the entitlement of history, and deepen our relationship with the real India, the modern India, the future India,” he told a room packed with business leaders, politicians and trade commissioners from both nations. 

He also spoke about the economic challenges that the UK currently faces this year and in the near future, including the skills shortage the country is experiencing. “We absolutely have to address that to create the conditions. Take advantage of AI and technology, which is moving at pace and could be a huge boost for our economy, if we get our arms around it and regulate. So there are things that we can do. I think one of the most important things is going to be a partnership, where businesses can work together strategically over a period of time.”

Is India the answer to some of the UK’s troubles? That is the lingering question as the two nations deepen their ties and work to secure a new free trade agreement (FTA). India’s High Commissioner to the UK, Vikram Doraiswami, speaks highly of the potential for a closer relationship between the UK and India, including the sharing of ideas, new partnership opportunities and improved ability to tackle issues such as climate change. 

“There is so much openness for much stronger relationships, from government to Parliament, business and academia. In fact, I assumed it would be a lot of work in trying to interest people in the relationship, but it seems I’m pushing on an open door,” he says.

Doaisswami’s British equivalent, Alexander Ellis, is more blunt about the importance of the relationship: “The UK doesn’t have a choice. It has to go big on India.” 

India is extremely attractive to the UK, but also quite challenging, he says. There has historically been a hesitation to deepen the relationship because of this, but that has changed in recent years, starting with Boris Johnson’s tenure as Prime Minister. “There’s a collective interest in having a much bigger and broader relationship with India, which is forward looking. The art is converting the design to reality.”

The UK is going to have to adapt to risk in future, says Ellis, because the future lies with countries such as India. The risk is lowering in India, in part thanks to the efforts of Prime Minister Narendra Modi and his government. “There just has to be determination that we're in it for the long run.”

B.V.R. Subrahmanyam, the CEO of government policy think tank Niti Aayog and former Commerce Secretary of India (FTA negotiations started under his watch), has a view of the issues and opportunities that span both policy and the private sector. 

He is confident in the “tremendous pool” of support on both sides. “There are shared goals and visions between the two nations about striking this deal for shared prosperity.” 

Closer partnerships are necessary to tackle the myriad challenges the world faces at the moment, from climate change to ageing populations to the rapid development of artificial intelligence (although he acknowledges that this is also an opportunity).

“There are many unknown unknowns about these transformations. It’s our job as government, as the private sector, as individuals, as academics, as institutions, to see that these transformations are guided in directions that are more desirable for us. And I think that’s a very, very difficult role.” 

It’s not only about finding solutions – it’s also about adjusting to innovations, he explains. It is not just about advancements in science and technology; it could be innovation in business models, and institutions to respond to these rapid changes.

In this environment, the UK and India bring complementary skills to the table, says Subrahmanyam. “What you bring to the table is sophistication. What India brings to the table is scale.”

He points to the COVID-19 rollout as a concrete example of how this can work in practice – the vaccine was developed in the UK and brought to scale in India. This is an example of how quickly and efficiently the UK-India partnership can work together.

India is also a relatively young nation, with 720m citizens under 32; there’s a huge opportunity for the country to fill some of the skills and talent gaps that western nations are experiencing. Indeed, an increasingly sophisticated outsourcing market in India is working with more and more accountancy firms, even down to the smaller practices.

Traditionally, Indian society has been risk averse, Subrahmanyam explains, which is why professions such as doctor, lawyer, accountant and engineer are popular. Taking that skills base and encouraging a more entrepreneurial spirit is necessary and the nation is taking steps to encourage that.

In education, 10,000 schools now have ‘tinkering’ labs to encourage students to improve their creativity and problem-solving skills. This will scale up over the next few years. Higher education institutions have also started to set up incubators – 700 and counting – that run hacking challenges and other targets from both the private sector and the state. “On any given day, there is a hackathon happening in some parts of India,” says Subrahmanyam.

Last year, $24bn was raised as seed funding by Indian startups. “There are areas that we are already good at: FinTech, agritech, biotech. It’s e-commerce, b2c transactions – a lot is happening on the innovation ecosystem as far as India is concerned.”

Looking to the rest of the world, there are more than 2,000 global capability centres to support multinational R&D activities. Several big firms in India are involved in these. As one partner from a large firm in India says: “We have six centres to offer high-end services through global capability centres.”

He agrees that a lot of Indian accountants are already filling skills gaps in the UK. “The Indian qualification is very transferable. The Institute of Chartered Accountants of India is changing its qualification to include psychology and new technologies so that Indian Chartered Accountants can bring more to the modern role.”

The UK and Indian governments have a startup Launchpad allowing UK startups to explore Indian opportunities and vice versa. Subrahmanyam wants to see this expanded to allow the talent base in India to extend its reach.

“India is known to be the single biggest supplier of working age people for the next 30 years. Some people call it the demographic challenge. We call it the demographic dividend. A highly skilled, educated and competent workforce is going to be the growth engine of the world in innovation, as well as in simple GDP terms.”

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