Feature of the Week
Table 2: UK Quarterly Import from India (GBP Mn)
Table 3: UK Quarterly Trade with India (GBP Mn)
Table 4: UK Quarterly Balance of Trade (BOT) with India (GBP Mn)
Table 5: UK total trade with BRIC countries (GBP Mn)
Table 6: Top 10 commodities exported from UK to India (2010)
Table 7: Top 10 commodities imported by UK from India
Good times are back! India-UK quarterly trade has touched an all time high. The high profile visit of UK premier seems to have brought the desired effect with the trade soaring to GBP 2500 mn for Q1 of 2011. The recovery in the UK has boosted UK import from India and at the same time UK exports to India have also improved as India’s appetite for growth just gets better boosting the demand for British products.
A look at the UK quarterly Exports to India (Table 1) shows that UK exports to India are at an all time high. The exports have gone up by 11% from the corresponding quarter value. The CAGR registered since 2007 is around 14%. The Pearls, Nuclear Reactor, Iron & Steel, Electrical Machinery and Optical instruments are top 5 exports from UK to India.
In the similar period UK quarterly imports (Table 2) from India have also registered an impressive growth of 17% in 2011. All three months have shown better than their corresponding values last year and so for the first time in history the first quarterly import from India has reached around GBP 1.5 bn. The growth in imports from India to UK is also the spinoff of global recovery and growth in the economy of UK. The exports from India to UK mainly include mineral fuels; non- knitted & knitted apparels, nuclear reactors & vehicles.
With Exports and Imports both growing at stellar pace the total bilateral trade (Table 3) has increased by 15% and value has gone up to GBP 2542 mn. With this rate trade is likely to become double in next 6-7 years. The Balance of Trade (BOT) shows that UK runs in trade deficit with India but the deficit has largely remained within the limit unlike China which runs a huge trade surplus with UK.
The trade growth is the result of continuous engagement of governments and business community from both the countries. Agri and Food Processing, Healthcare, Infrastructure, High Technology, IT and Energy are the focus areas of bilateral cooperation. On institutional basis, the two countries signed an agreement to establish Joint Economic and Trade Committee (JETCO) in 2005 and since then it has been providing useful inputs to enhance the level of bilateral cooperation. The two nations have also formed joint working groups on Hi-tech, IPR, Accountancy, Legal services, infrastructure, Agribusiness, Healthcare, Financial service and company affairs.
India-UK trade is poised for historical growth as the two countries are engaged in fruitful discussion over trade in critical areas like defence/strategic trade, civil nuclear cooperation, biotechnology, nano-technology and civil aviation. The India- EU FTA is also likely to further fuel the trade growth between the two countries.
The growth in trade is a breather for both the countries as there has been continuous pressure to revive the pre recession period growth. While India needs to increase its exports to achieve its ambitious export target, increasing UK exports have helped in allaying concerns reflected in the form of protectionism shown after recession hit the world’s largest economy. With the trade registering impressive growth, the harsh and protectionist measures are not going to become the reality very soon. It has helped in easing the pressure for both the nations.
Despite the growth exhibited by India-UK Trade, there is much more to be done. A look at the UK-BRIC (Table 5) trade suggests that all BRIC countries except China need to boost their trade with UK. China-UK trade alone is more than the aggregate trade between rest three BRIC countries and UK. It clearly shows that India-UK Trade remains untapped and hence there is immense scope for trade to go up. With the manufacturing costs rising in China and India ready to leverage that opportunity, it is important that India-UK Trade matches the growth story of UK-China trade.
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