Figure 1: UK's Exports to India 2004-09
Table 2: The top 20 commodities exported from UK to India in 2009
Figure 2: UK's Imports from India in 2009
Table 3: the top 20 commodities imported by UK from India
India-UK trade in goods has been growing at a CAGR of 13% since 2001 till 2008, but the math deceits and recession superimposes. The merchandise bilateral trade fell to GBP 7.22 billion in 2009. Going specifically, the total imports from India stand at 4.32 billion GBP whereas the exports to India stand at 2.89 billion GBP in the year 2009. Though the UK’s imports have increased marginally from 4.26 to 4.32 billion GBP, the UK’s exports have witnessed a significant drop of 29.6% from the previous year.
Overall the trade in goods between the two countries has increased over the years with 2009 being the only exception. Whilst overall trade with India has grown, UK’s share of exports to Indian market has fallen. It was ranked top 5th exporter to India in 2005 and is now ranked 18th.
The exports of UK to India have grown with a CAGR of 16.4% from 2004 to 2008. However, it witnessed a 29% fall in 2009 owing to the global recession. In 2008, UK exported goods worth GBP 248,613 million to the entire world of which it exported GBP 4,118 million to India. Thus exports to India accounted for 1.65% of UK’s total exports, showing a growth of 38.93% over the previous year.
The top 20 commodities exported to India from UK are mentioned below. The bear share of exports was of natural pearls, precious and semi- precious stones and metals and jewellery with 40.94% of the total exports to India. Next to them was power generating machinery and equipment with 14.13% of the total share.
The imports of UK from India have a CAGR of 16.2% from 2004 to 2008. Due to economic recession in 2009; it remained at almost 2008 level. Exports to India account for 1.25% of UK’s total exports, showing a growth of 38.93% over the previous year.
The top 20 commodities account for 79.49% of the total that UK imports from India while the top 5 by themselves account for 41.32%.
Looking at the Indo-UK Goods trade pattern, it is quite clear that trade in goods remains undervalued. Here are some sectors, which can provide an opportunity for trade:
- Pharmaceutical products form 8.5% of the total exports of UK and are worth GBP 19516 million. They are at the 16th position in the list of top 20 commodities exported to India. UK exports pharmaceutical products worth GBP 38 million to India which forms 1.31% of the total exports to India and a mere 0.19% of its total pharmaceutical products’ exports. Pharmaceutical sector being one of the fastest growing sectors in India is a good market to target with its billion plus population and resilient economy.
- Furniture (Medical, Surgical, Mattresses, Lamps and light fittings) came in the top 20 commodities imported by UK in the year 2009. UK imported GBP 4,272 million worth of furniture which formed 1.4% its total imports for the year 2009. UK imported furniture worth GBP 55 million from India and it formed only 1.2% of the total furniture imports for the year 2009. There is scope for improvement for this commodity.
- Chemical materials and products are one of the top 20 exported commodities from UK in 2009 in terms of money value. However, this commodity does not appear in the top 20 exports of UK to India. In 2009, UK exported chemical materials and products worth GBP 2700 million all over the world. Out of this, chemical materials and products worth GBP 54 million are exported to India. This commodity has immense scope for improvement.
Hence,there is immense scope for Indo-UK trade in goods to move up significantly.While India lags China in goods trade, there is a demand supply gap as well. It calls for extensive discussion on bilateral cooperation and initiative from both the sides. Rising incomes in India will result in a strong growth of middle class consumer, thus creating opportunities for exporting UK firms. The growth of India and other developing countries will benefit UK with cheaper goods for its consumers, new markets for exporters, and faster growing investments for its savings. India will also be able to leverage its good relations with the UK to access other EU markets, including the new accession countries.