Channel: Trade

May 19, 2010
India-UK trade: A snapshot
India and UK's trade relations have undergone a massive change in the last few decades. It is a well known fact that India is world's fourth largest economy in purchasing power parity terms
Tables & Graphs
India and UK's trade relations have undergone a massive change in the last few decades. It is a well known fact that India is world's fourth largest economy in purchasing power parity terms and UK is the 4th largest in GDP dollar terms. Given their respective positions in the world economy these nations are poised to increase the size of their trade baskets.
Despite the slowdown in international markets, India has been exhuming confidence. India has economically and industrially advanced to a level from where further development can be accelerated even more. The projected GDP of India in 2025 is likely to surpass that of UK. Within three decades, India is projected to have the world's third largest economy and more people than China.
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.

Trend of Bilateral Trade:

Indo-UK trade has been growing at a CAGR of 14% since 2001.Trade of goods has been growing at a CAGR of 13% while services sector has registered a 15% growth.
The trade in goods between India and UK was GBP 7.22 billion in the year 2009. That essentially shows the impact of the recession, since in the year 2008, the trade in goods was GBP 8.6 billion. The total imports from India stand at GBP 4.32 billion whereas the exports to India stand at GBP 2.89 billion in the year 2009. Though the UK’s imports have increased marginally from GBP 4.26 to 4.32 billion, the UK’s exports have witnessed a significant drop of 29.6% from the previous year.

The tables and charts below show the imports and exports of UK from and to India in the year 2009.
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.
India is ranked 13th in the UK’s whole world exports list where USA, Germany and Netherlands are the top 3(in that order) in 2009. On the imports front India ranks 19th in the UK’s whole world imports list with Germany, USA and Netherlands being the top 3 in that order.

From India’s viewpoint, UK ranks 5th with 3.6% of India’s total exports finding its way to the UK while the UK does not figure in India’s top 5 import partners.
Trade in Services:
The UK to India service export basket is made up of Transportation (26%); Travel (25%); Other Business Services (21%); Financial Services (14%) and Licensing & Royalties (3%) in descending order of share of trade. The India to UK service export basket is made up of Travel (39%); Transportation (21%); Other Business Services (21%); Computer & Information Services (11%) and Communications (5%).
A careful analysis of the graph below shows that whilst the service categories may well be very different, the trade between the two nations has been growing at a stellar pace and touching near 30% for both nations at some point in the last 5 years. The overall CAGR since 2003 has been 21.4%. The imports from India have grown at slightly higher pace while UK exports to India have grown at CAGR of 21.4%. India is UK’s 24th largest export partner in the service export sector and 12th largest import partner.
Though there is no service trade data available for year 2009, but it can be safely said that service trade between two nations has successfully resisted the recession.

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