International finance

Report on: India's trade relation with uk

Submitted to: Prof. Vaishali vartak

Submitted by: Ashish chanchlani Sanjay parmar


Economy of India
The economy of India is the 11th largest in the world with a GDP (a year's goods and services) of $568 billion (U.S.). In terms of PPP the economy is fourth largest (worth $3.319 trillion U.S.) with the growth rate of 8.9% in 2010. However, that is still only $3100 (considering PPP) per person per year. India's economy includes agriculture, handicrafts, industries, and a lot of services. Services are the main source of economic growth in India today, though two-thirds of Indian people earn their living directly or indirectly through agriculture. In recent times, due to its large number of well-educated people who can speak English, India sells a lot of computer programs to other countries. For most of India's independent history, it had strict government controls in many areas such as telecommunications (communication over long distances), banking and foreign direct investment. Since the early 1990s, India has slowly opened up its markets by reducing government control on foreign trade and investment. The social and economic problems India faces are the increasing population, poverty, lack of infrastructure (buildings, roads, etc.) and growing unemployment. Although poverty has gone down 10% since the 1980s, a quarter of India's citizens still cannot pay for enough food. The Indian economy has continuously recorded high growth rates and has become an attractive destination for investments, according to Ms Pratibha Patil, the Indian President. "India's growth offers many opportunities for mutually beneficial cooperation," added Ms Patil. "Today India is among the most attractive destinations globally, for investments and business and FDI had increased over the last few years," said Ms Patil. The Indian economy is expected to grow at around 7.5 per cent, according to Dr Manmohan Singh, the Indian Prime Minister. The PM acknowledged Asia's emerging economies were "growing well" and were, "in fact, contributing to the recovery of the world economy". The overall growth of gross domestic product (GDP) at factor cost at constant prices, as per Revised Estimates, was 8.5 per cent in 2010-11 representing an increase from the revised growth of 8 per cent during 2009-10, according to the monthly economic report released for the month of September 2011 by the Ministry of Finance. Overall growth in the Index of Industrial Production (IIP) was 4.1 per cent during August 2011.


Indian Currency The Indian rupee
The Indian rupee (Hindi: रुपया) (sign: ; code: INR) is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India. Before July 2010, the rupee was abbreviated as "Rs". During the past 15 years, the value has ranged from $1 USD = 35–49 INR or 1 euro = 44–68 INR. The modern rupee is sub-divided into 100 paise (singular paisa). The coins have common values of 5, 10, 20, 25 and 50 paise, as well as 1, 2, 5 and 10 rupees. The bank notes are available in values of 1, 2, 5, 10, 20, 50, 100, 500 and 1000 rupees. The Indian rupee symbol ( ) is an amalgam of both the Devanagari consonant "र" (Ra) and the Latin letter "R" without the vertical bar. The design was presented to the public by the government of India on 15 July 2010. Previously, the abbreviation "Rs" (or "Re") was used.

Officially, the Indian rupee has a market-set exchange rate. However, the RBI trades actively in the USD/INR currency market to impact effective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to the US dollar is a de facto controlled exchange rate. This is sometimes called a managed float. Other rates such as the EUR/INR and INR/JPY have volatilities that are typical of floating exchange rates. It should be noted, however, that unlike China, successive administrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to deliver low volatility in the exchange rates, and not to take a view on the rate or direction of the Indian rupee in relation to other currencies. Also affecting convertibility is a series of customs regulations restricting the import and export of rupees. Legally, foreign nationals are forbidden from importing or exporting rupees, while Indian nationals can import and export only up to 5000 rupees at a time, and the possession of 500 and 1000 rupee notes in Nepal is prohibited. RBI also exercises a system of capital controls in addition to the intervention (through active trading) in the currency markets. On the current account, there are no currency conversion restrictions hindering buying or selling foreign exchange (though trade barriers do exist). On the capital account, foreign institutional investors have convertibility to bring money in and out of the country and buy securities (subject to certain quantitative restrictions). Local firms are able to take capital out of the country in order to expand globally. But local households are restricted in their ability to do global diversification. However, owing to an enormous expansion of the current account and the capital account, India is increasingly moving towards de facto full convertibility. There is some confusion regarding the interchange of the currency with gold, but the system that India follows is that money cannot be exchanged for gold, in any circumstances or any situation. Money cannot be changed into gold by the RBI. This is because it will become difficult to handle it. India follows the same gold-interchange principle as Great Britain and America.


Politics of India
India is the world's most populous democracy. A parliamentary republic with a multi-party system, it has six recognised national parties, including the Indian and the Bharatiya Janata Party (BJP), and more than 40 regional parties. The Congress is considered centre-left or "liberal" in Indian political culture, and the BJP centre-right or "conservative". For most of the period between 1950—when India first became a republic—and the late 1980s, the Congress held a majority in the parliament. Since then, however, it has increasingly shared the political stage with the BJP, as well as with powerful regional parties which have often forced the creation of multi-party coalitions at the Centre.

Current Population of India is 1.21 billion people is the second most populous country in the world, while China is on the top with over 1.35 billion people. The figures show that India represents almost 17.31% of the world's population, which means one out of six people on this planet live in India. Although, the crown of the world's most populous country is on China's head for decades, India is all set to take the numerous Uno position by 2030. With the population growth rate at 1.58%, India is predicted to have more than 1.53 billion people by the end of 2030. More than 50% of India's current population is below the age of 25 and over 65% below the age of 35. About 72.2% of the population lives in some 638,000 villages and the rest 27.8% in about 5,480 towns and urban agglomerations. The birth rate is 22.22 births/1000 population, while death rate is 6.4 deaths/1000 population. Fertility rate is 2.72 children born/woman (NFHS-3, 2008) and Infant mortality rate is 30.15 deaths/1000 live births. India has the largest illiterate population in the world. The literacy rate of India as per 2001 Population Census is 65.38%, with male literacy rate at 75.96% and female at 54.28%. Kerala has the highest literacy rate at 90.86%, Mizoram (88.80%) is on the second Position and Lakshadweep (86.66%) is on third. Some of the reasons for India's rapidly growing population are poverty, illiteracy, high fertility rate, rapid decline in death rates or mortality rates and immigration from Bangladesh and Nepal. Alarmed by its swelling population, India started taking measures to stem the growth rate quite early. In fact India by launching the National Family Planning programme in 1952 became the first country in the world to have a population policy. The family planning programme yielded some noticeable results, bringing down significantly the country's fertility rate. In 1965-2009, the contraceptive usage more than tripled and the fertility rate more than halved. The efforts did produce positive results, however, failed to achieve the ultimate goal and the population of India since getting independence from Britain in 1947 increased almost three times. Whereas India has missed almost all its targets to bring the rate of population growth under control, China's 'One Child Policy' in 1978, has brought tremendous results for the latter. The policy claims to have prevented between 250 and 300 million births from 1978 to 2000 and 400 million births from 1979 to 2010.


Poverty in India
India suffers from a lot of poverty, which means that many people there do not have enough money, 27.5% of the population is living below the poverty line in 2004–2005. Monthly per capita consumption expenditure is below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. 1 out of every 4 Indians earns less than $0.40 per day. 75% of the poor are in rural areas. Most of them are daily wagers and landless labourers. A study was done by the McKinsey Global Institute. This study found 54% of the people living in India were living on a household income of less than 90,000 rupees a year. That means about a dollar per person per day. National Commission for Enterprises in the Unorganised Sector (NCEUS) published a report in 2007. This report state, 77% of Indians (that means 836 million people), lived on less than 20 rupees per day (USD 0.50 nominal, USD 2.0 in PPP). Most of them have no job or social security. There are two views on the cause of poverty in India.
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The Develop mentalist View: According to this view, India suffers from poverty due to colonial exploitation. The Neoliberal View: According to this view, the following are the causes of poverty. o Unemployment and underemployment o Lack of property rights o Dependence on agriculture o High population growth rate o Caste system

No of cell phone users
The number of cell phones in India was 250 Million in Jan 2008; about 400 million in mid2009 and slated to easily cross 500 Million in 2010 with a current growth rate of over 10 million new cell phones a month. A growth that is clearly not abating. At $20-$200 per cell phone and $0.02-$0.04 a minute rate, it is a luxury that folks earning $1 a day cannot afford after paying for food, housing, and clothes. The country has grown between 7%-9% a year; i.e. almost GDP almost doubled in these 7 years. Culture of India Indian cultural history spans more than 4,500 years. During the Vedic age (c. 1700–500 BCE), the foundations of Hindu philosophy, mythology, and literature were laid, and many beliefs and practices which still exist today, such as dharma, karma, yoga, and moksha, were established. India is notable for its religious diversity, with Hinduism, Sikhism, Islam, Christianity, and Jainism among the nation's major religions. The predominant religion, Hinduism, has been shaped by various historical schools of thought, including those of the Upanishads, the Yoga Sutras, the Bhakti movement, and by Buddhist philosophy.


Economy of United Kingdom
The economy of the United Kingdom is the seventh-largest national economy in the world measured by nominal GDP and seventh-largest measured by purchasing power parity (PPP), and the third-largest in Europe measured by nominal GDP (after Germany and France) and second-largest measured by PPP (after Germany). The UK's GDP per capita is the 20th highest in the world in nominal terms and the 17th highest measured by PPP. The British economy comprises (in descending order of size) the economies of the countries of England, Scotland, Wales and Northern Ireland. The UK is a member of the Commonwealth of Nations, the European Union, the G7, the G8, the G20, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank, the World Trade Organisation and the United Nations. In the 18th century the UK was the first country in the world to industrialise, and during the 19th century possessed a dominant role in the global economy. From the late 19th century the Second Industrial Revolution in the United States and the German Empire presented an increasing challenge to Britain's role as leader of the global economy. By the turn of the 20th century the German Empire had vastly outperformed the British economy. The size of the German economy had surpassed the British by 25%. The costs of fighting both the First World War and Second World War further weakened the relative economic position of the UK, and by 1945 Britain had been superseded not only by Germany but by the United States as the world's dominant economic power. However, the UK still maintains a significant role in the world economy. The UK is one of the world's most globalised countries. London is the world's largest financial centre alongside New York and has the largest city GDP in Europe. As of December 2010 the UK had the third-largest stock of both inward and outward foreign direct investment (in each case after the United States and France). The aerospace industry of the UK is the second or third-largest national aerospace industry, depending upon the method of measurement. The pharmaceutical industry plays an important role in the UK economy and the country has the third-highest share of global pharmaceutical R&D expenditures (after the United States and Japan). The British economy is boosted by North Sea oil and gas reserves, valued at an estimated £250 billion in 2007. The UK is currently ranked fourth in the world (and first in Europe) in the World Bank's Ease of Doing Business Index.

Demography of the United Kingdom
According to the 2001 census, the total population of the United Kingdom was 58,789,194 the third-largest in the European Union (behind Germany and metropolitan France) and the 21st-largest in the world. Its overall population density is one of the highest in the world, due to the particularly high population density in England. Almost one-third of the population lives in England's southeast and is predominantly urban and suburban, with about 8.2 million in the capital city of London. The United Kingdom has extremely high literacy rate (99%) is attributable to universal public education introduced for the primary level in 1870 and secondary level in 1900. Parents are obliged to have their children educated from the ages of 5 to 16 (with legislation passed to raise this to 18), and can continue education free of charge in the form of A-Levels,

vocational training or apprenticeship to age 18. About 40% of British students go on to postsecondary education (18+). The Church of England and the Church of Scotland function as the national churches in their respective countries, but all the major religions found in the world are represented in the United Kingdom. The UK's population is predominantly White British. Being located close to continental Europe, the countries that formed the United Kingdom were subject to many invasions and migrations, especially from Scandinavia and the continent, including Roman occupation for several centuries. Historically, British people were thought to be descended mainly from the different ethnic stocks that settled there before the 11th century; pre-Celtic, Celtic, AngloSaxon, Viking and Norman. The geneticist Stephen Oppenheimer carried out an extensive research of the British Isles, finding that the Celtic and Anglo-Saxon influx had little effect, with the majority of British ethnicity tracing back from an ancient Palaeolithic Iberian migration, now represented by the Basques so that 75% of the modern British population could (in theory) trace their ancestry back 15,000 years. Although Celtic languages are partially spoken in Scotland, Cornwall, and Northern Ireland, the predominant language overall is English. In North and West Wales, Welsh are widely spoken as a first language, but much less so in the more English dominated South East of the country.

London is the world capital for foreign exchange trading. The highest daily volume, counted in trillions of dollars US, is reached when New York enters the trade. The currency of the UK is the pound sterling, represented by the symbol £. The Bank of England is the central bank, responsible for issuing currency. Banks in Scotland and Northern Ireland retain the right to issue their own notes, subject to retaining enough Bank of England notes in reserve to cover the issue. Pound sterling is also used as a reserve currency by other governments and institutions, and is the third-largest after the U.S. dollar and the euro. The UK chose not to join the euro at the currency's launch. The government of former Prime Minister Tony Blair had pledged to hold a public referendum for deciding membership should "five economic tests" be met. Until relatively recently there was debate over whether or not the UK should abolish its currency Pound Sterling and join the Euro. In 2007 the British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer. When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. He ruled out membership for the foreseeable future, saying that the decision not to join had been right for Britain and for Europe. In particular, he cited fluctuations in house prices as a barrier to immediate entry.


The United Kingdom is a unitary state under a constitutional monarchy. Queen Elizabeth II is the head of state of the UK as well as of fifteen other independent Commonwealth countries. The monarch itself is symbolic rather than political, and only has "the right to be consulted, the right to encourage, and the right to warn" The United Kingdom has an unmodified constitution, as do only three other countries in the world. The Constitution of the United Kingdom thus consists mostly of a collection of disparate written sources, including statutes, judge-made case law and international treaties, together with constitutional conventions. As there is no technical difference between ordinary statutes and "constitutional law" the UK Parliament can perform "constitutional reform" simply by passing Acts of Parliament and thus has the political power to change or abolish almost any written or unwritten element of the constitution. However, no Parliament can pass laws that future Parliaments cannot change.

The United Kingdom is a developed country with social welfare infrastructure, thus discussions surrounding poverty tend to be of relative poverty rather than absolute poverty. According to the OECD, the UK is in the lower half of developed country rankings for poverty rates, doing better than Germany, Italy and the US and less well than France, Austria, Hungary, Slovakia and the Scandinavian countries. The poverty line in the UK is commonly defined as being 60% of the median household income. In 2007–2008, this was calculated to be £115 per week for single adults with no dependent children; £199 per week for couples with no dependent children; £195 per week for single adults with two dependent children under 14; and £279 per week for couples with two dependent children under 14. In 2007–2008, 13.5 million people, or 22% of the population, lived below this line. This is a higher level of relative poverty than all but four other EU members. In the same year, 4.0 million children, 31% of the total, lived in households below the poverty line, after housing costs were taken into account. This is a decrease of 400,000 children since 1998–1999


India-UK relations
The United Kingdom is committed to developing an enhanced partnership with India. The UK/India relationship is mutually beneficial and wide ranging; covering-development, regional stability, trade and investment, climate change, counter terrorism and reform of the global international systems. We share the core values of democracy, pluralism and tolerance. British society is enriched by its strong, dynamic human ties to India. Over 1 million people travel between the UK and India every year. Between 1.5m and 2m people of Indian origin live in the UK, the largest ethnic group. Partners in business The UK and India are among the top investors in each other’s economies bringing significant long term benefits to both. The UK is the largest European investor in India and the fourth largest internationally. Likewise, India is the third largest investor in the UK. The UK is by far the most popular business destination in Europe for Indian companies. 700 out of the 1200 Indian firms in the EU operate from the UK. Tata is the largest single manufacturing company in the UK. The two biggest acquisitions for India globally involve the UK: Vodafone's £7.3bn ($11bn) acquisition of Hutchison in 2007 and Tata’s £8bn ($12bn) acquisition of Corus in the same year. In February 2011, BP and Reliance announced they were close to finalising a tie up worth £ 7.2bn. In 2010, bilateral trade between the UK and India grew by 20%, bringing the total to £13 billion. UK goods exports to India grew by 37% and goods imports from India rose by 27%. Various bilateral initiatives have been introduced in 2010-11 to improve bilateral trade between the two countries:

UK/India CEO Forum was established under the joint chairmanship of Ratan Tata & Peter Sands (Standard Chartered) to advise the UK and Indian governments on measures to increase bilateral trade and investment. British India Infrastructure Group-to take forward business interests in India’s large scale infrastructure development programme British India Roads Group to do likewise in the roads sector. The UK India Skills Forum under the joint chairmanship of RCM Reddy (IF&SL) and Roy Newey (A4e) was established in early 2010 to provide an open business to business platform for skills providers from each country to share experiences and opportunities for skills delivery.

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Prosperity Fund The Prosperity Fund with a corpus of £2.5 million for 2011-2012 builds on the achievements of the previous Low Carbon High Growth Strategic Programme Fund and directly supports our implementation of Foreign Policy Priority 2: “Build Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources, and promoting sustainable global growth”. The FCO’s prosperity fund focuses on promoting sustainable global growth and in particular, will be consistent with the UK’s development objectives of promoting sustainable development and improving welfare. Partners in the Knowledge Economy Together, the UK and India are leaders in ensuring that knowledge sectors drive inclusive economic growth in the 21st century. In November 2010, David Willetts, Minister for Education and Science, visited India for the annual ministerial UK India Education Forum. He also saw collaborative education and research projects in several Indian cities, and initiated new collaboration on space research, leading to a memorandum of understanding in early 2011. There is a significant increase in the UK/India partnership on education, which covers support to primary school children, between UK and Indian universities, and research into the most advanced technologies. There are over 80 collaborative UK-India programmes leading to UK degrees or awards in India. There are some 5,000 Indians studying for UK degrees in India. India is one of the British Council’s biggest operations-reaching audiences of over 54 million people in India. British Council's Project English aims to ensure that teachers and students of English have access to materials they need. The project has now worked with 2,348 master trainers throughout India who themselves reached over 450,000 teachers, who in turn taught 17 million students. Up to 700 scholarship awards are offered to Indians by UK institutions each year, including 50 Foreign and Commonwealth Office (FCO) sponsored Chevening scholars. In 2010, a new Chevening Rolls Royce Science and Innovation leadership programme was launched. The 2006-11 UK India Education and Research Initiative (UKIERI) has linked 475 schools and higher education establishments in the UK and India. 2011 saw the launch of the second phase of UKIERI with matched funding by UK and Indian governments (in the region of £ 5 million over the next 3 years). The second phase of UKIERI will focus on four areas, building a new generation of leaders, innovation partnerships, skills development and enhancing mobility. UK and India researchers collaborate in a wide range of areas, including issues of global concern. The Research Councils (RCUK) office in India and the UK government's Science and Innovation Network promote this work. In 2010, agreements were reached for up to £70m of joint-funded research in key areas including renewable energy, water, food security and health.

Partners in development Development is a core part of the wider UK-India relationship, as demonstrated by the UK’s Secretary of State for International Development’s and International Development Committee’s (IDC) successful visits to India in 2010-11. In July 2011, the IDC published a report endorsing the government’s intention to continue the UK’s development cooperation programme in India up to 2015. This partnership has delivered real impact in India. UK contributions have helped lift 2.3 million people out of poverty in rural areas in the last 5 years. Since 2003, support from the Department for International Development (DFID) has put an additional 1.2 million children in school and provided more than 6,000 functional classrooms. It has trained 75,000 teachers since 2008 and helped save 17,000 lives per year since 2005. The UK government is bringing the development partnership with India up-to-date reflecting the huge changes in India and the need for our work to be additional and catalytic. The UK will maintain the level of the current programme (£280 million a year) and focus its work more tightly on India’s poorest and excluded people in the states of Bihar, Madhya Pradesh and Orissa. The UK will help reinforce the impact of India’s own development programmes and unlock the potential of the private sector to deliver jobs, products, infrastructure and basic services for poorest people. UK will develop a stronger partnership on global development issues such as growth and trade, climate change, access to essential medicines and high quality research. Partners in security Both the UK and India have suffered serious terrorist attacks over the years and are among the strongest proponents of international co-operation to counter terrorism and extremism. The UK and India are strategic partners in this field. Bilateral operational links are expanding and deepening, close cooperation around the 2010 Delhi Commonwealth Games represented a significant security success. The UK-India Counter-terrorism Joint Working Group met in London in March, to share analysis and strengthen cooperation. The UKIndia defence relationship has never been stronger. The bilateral programme of exercises, exchanges, training courses and high-level visits across all Services continues apace. Defence equipment co-operation includes supply of AW101 helicopters and Hawk Advanced Jet Trainers. Eurofighter Typhoon, which was deployed to India for Exercise Indra Dhanush 2, is among the top two bids for the medium multi-role combat aircraft contract. Partners on global issues The UK welcomes India’s growing global role and looks forward to deeper exchanges on key international security issues.UK is pleased that India is a non permanent member of the Security Council for 2011 and will continue to support India’s bid for permanent membership on the Council. The UK and India are partners in the G20 and worked closely together to promote a global recovery after the 2008-09 financial crisis.


Migration Migration is an important part of the UK-India relationship. The visit by Damian Green, the UK’s immigration minister in August 2010 is evidence of this importance. The UK’s largest visa operation worldwide is in India and processed in excess of 470,000 applications in 2010. The UK remains committed to providing a first class visa service to India. Bilateral Investment: Foreign Direct Investments from UK Cumulative FDI Inflows from all countries: US$126.450 billion (April 2000-Dec 2010) FDI Inflows from UK (April 2000-November 2010): US $ 6.359 billion Percentage share of FDI inflows into India from UK: 5% Rank: 4th UK’s Global outward FDI : US$1634 billion (2009) Percentage share of UK’s Global FDI into India :0.36% (2009) The UK is now the 4th largest inward investor into India, after Mauritius, Singapore and the USA. The UK’s share is above 5% of the total FDI in rupee terms. The cumulative total of UK’s FDI equity in India till March 2011 stood at USD 6.639 billion. However, the FDI inflow from UK underwent a steady decline from USD 1.878 billion in 2006-07, USD 1.176 billion in 2007-08, USD 864 million in 2008-09 and USD 657 million in 2009-10. The FDI inflow during FY 2010-11 was USD 755 million. FDI from UK during the last five years 2006-07: US$ 1,878 million 2007-08: US$ 1,176 million 2008-09 US$ 864 million 2009-10 US$ 657 million 2010-11 US$ 755 million FDI from India The flow of Indian investments into the UK which began as a trickle in the late 1990s has also now turned into a flood. Around 700 Indian companies are based in the UK. Half of these are based in London. India was the second largest foreign investor in London in 2008 after the USA and the fourth largest in 209 after the USA, Japan and France, with Indianowned businesses generating more than £14.4 billion (US$ 23 billion). The Tata’s are the biggest private sector employer in the UK. According to UKTI sources there were 92 new investments during 2009 and 2010, generating 3,271 new jobs and safeguarding 2,618 jobs. India rose to the third position as inward investor in 2010 after USA and China with 23 new acquisitions.


India and UK's Trade
Country's Trade between India and UK Year 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 Export 7140.52 6221.39 6649.53 6705.50 5622.93 5059.28 3681.09 3023.25 2496.41 2160.87 2298.71 2034.79 1855.40 2092.40 2046.91 Import 5396.78 4461.67 5872.32 4953.68 4177.87 3930.30 3566.20 3234.33 2777.01 2563.20 3167.92 2702.57 2621.37 2443.29 2133.96 Trade Balance 1743.74 1759.72 777.21 1751.82 1445.06 1128.98 114.89 -211.08 -280.60 -402.33 -869.21 -667.78 -765.97 -350.89 -87.05

*Values in US$ Million

It has been observed that India has a favourable Trade balance in the last seven years starting from the year 2004-05. The reason for this increase in trade balance is due to increase in Export, whereas on the other side Imports increasing in the same pattern i.e. increasing approximately 10% in the same order. In the year 2008-09 there has been decrease in the trade balance is the due to increase in the import of Undnatrd ethy alchl wth, chocolate and other food preparation items.


India's export to UK
Top 5 commodities in the last 5 years Item 1 Rice 2 Tea Export 67.628 65.296







*Values in US$ Million Observations from the above table: Looking at the data of the past 5 years for exports we can say that India has a “absolute advantage” over UK in Rice, Tea as well as in spices. By taking an average of the last five years it is observed that UK majorly imports Rice from India followed by tea. In the last five years it is observed that Rice and Tea interchange their positions in the year 2010-11 Tea was at first position and rice was at second position. It was also observed that spices and coconuts, brazil nuts interchange their position.


India's Imports from UK
Top 5 commodities in the last 5 years 1 2 Item Undnatrd ethy alchl wth CHOCOLATE AND OTHER FOOD PREPARATIONS CONTAINING COCOA Import 64.68 1.902










*Values in US$ Million Observations from the above table: For the past 5 years UK have had an “absolute advantage” over India in chemicals and therefore it has been largest imported commodity from UK. Also UK also has a comparative advantage in Chocolate, coco and other food preservatives , since it is cheaper for India to import these commodities from UK as it is expensive to produce them here in India.


Trade and Investment with the UK
Two-way trade of goods and services between India and the UK has doubled since 1993; Over 2447 new Indo-British joint ventures have been approved by the Government of India since Aug 1991. For the period August 1991 to July 2006, the number of technical collaborations approved from UK stands at 851, which is 10.89% of the total technology transfer approvals. Total two-way trade (goods and services) grew by about 20% in 2005 (to £ 7.9 bn). UK exports to India grew by 21.3% in 2005 (goods up by 25.3%; services up by 12.3%). The UK is India's fifth largest trading partner after the USA (10.63%), China (6.99%), United Arab Emirates (5.13%) and Germany (3.81%), and accounted for 3.56% of India's total foreign trade in goods in FY2005/06. Major items of trade in goods included - UK exports to India: non-metallic minerals, gold, power generating and telecom equipment, transport equipment and industrial machinery. UK's imports from India: textiles and readymade garments, gems and jewellery, footwear, metal manufactures, power generating equipment, organic chemicals and vegetables and fruit. UK has the third largest share of new investment approved since 1991 till March 2006 (10.04 %), well ahead of Germany (3.78%), Japan (4.67%) and France (2.59%). UK has the fifth largest share of new investments implemented since 1991 till October 2006 (5.43% cumulative share), behind Mauritius (41.09%) USA (13.94%), Japan (5.6%) and Netherlands (6.24%). In addition, there is also significantly high reinvestment by UK companies already established in India, which is not included in the new investment figures. Indian investments into the UK increased by a staggering 110% in 2005-06 recording a total of 76 investment projects from India creating 1449 jobs. IT sector dominated with 26 projects followed by pharmaceuticals (12 projects). India now ranks third among foreign investors in the UK globally (with an investment of £ 1.02 bn) and the second largest from Asia Pacific region behind only the USA and Japan.


UK, which remained at second position in India's leading trade partner till 2002, has become India's fifth leading partner last year. Looking from UK's perspective, India was the second largest foreign investor in London in 2008 after the USA and the fourth largest in 2009 after the USA, Japan and France, with Indian-owned businesses generating more than £14.4 billion (US$ 23 billion). The Tata’s are the biggest private sector employer in the UK. According to UKTI sources there were 92 new investments during 2009 and 2010, generating 3,271 new jobs and safeguarding 2,618 jobs. India rose to the third position as inward investor in 2010 after USA and China with 23 new acquisitions. India was UK's 15th largest export market, and the UK's largest exporting market in the developing world (ahead of China). Among the countries where bulk of UK's import come from, partners, India is the 25th largest exporter to the UK.


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