Editorial✍ Prelims cum Mains

The deepening of economic bond between India, UK

Both India and UK taking initiatives to drive the recovery from Covid pandemic:

  • As the world faces the economic fallout of the Covid-19 pandemic, it is important for countries to not just recover, but build back better and stronger.
  • The United Kingdom (UK) and India are leading the global economic response to Covid-19, as co-authors of the G20 Action Plan.
  • The governments of both the countries have announced a series of initiatives across investment, trade, infrastructure and sustainable finance to drive growth and jobs for both countries.

Progress in economic relations since the first Dialgue (EFD):

  • Since the first India-UK Economic and Financial Dialogue (EFD) in 2007, trade between the UK and India has more than doubled to nearly £24 billion in 2019.
  • The Indo-UK investment relationship now supports over half a million jobs in each other’s economies.
  • The combined revenue of Indian companies in the UK has grown by 87% in the last five years.
  • The UK is the second fastest growing G20 investor in India over the last 10 years; since 2000, British companies have invested nearly £22 billion.
  • The UK is India’s second biggest research partner. 

10th India-UK Economic and Financial Dialogue (EFD):

  • Recently, the finance ministers of India and UK held the landmark 10th India-UK Economic and Financial Dialogue (EFD), supported by regulators and senior industry leaders from both countries.
  • The latest dialogue provided an opportunity to reflect on the progress so far since the first EFD, and look at future challenges. 
  • The next couple of years have important international events for the countries, as the UK prepares for its G7 and COP-26 presidencies in 2021, and India hosts the G20 Summit in 2022.

Agreed to work together:

  • The UK-India partnership presents many opportunities,and is a relationship fit for the 21st century.
  • The finance ministers of the two countries restated their commitment to work together, with tangible action.
  • They agreed an ambitious new partnership to share expertise on infrastructure finance and project delivery.
  • Sustainable finance and green investment:
    • The ministers agreed to scale up our cooperation on sustainable finance, to mobilise even greater green investment.
    • As the need for building a resilient world becomes increasingly urgent, sustainable finance has particularly exciting potential.
      • For instance, the joint UK-India Green Growth Equity Fund, announced at the ninth EFD, has already catalysed nearly £300m of investment to support green infrastructure projects in India. 
    • This means innovative companies, who know how to build in a sustainable way, now have access to reliable finance to grow their business and help clean up our world.
  • Financing India’s infrastructure and development:
    • India and UK now have a chance to deepen collaboration in infrastructure finance.
    • As the world’s leading global financial centre, London can be the perfect partner for New Delhi’s ambitious growth plans — including the delivery of India’s $1.5-trillion national infrastructure pipeline.
    • Indian firms have raised £11.5 billion in masala, dollar and green bonds listed on the London Stock Exchange since 2016.
    • UK’s world-class UK regulatory expertise can help accelerate the development of through a strategic partnership on India’s new GIFT City’s international financial centre. 
  • Freer capital flows between the countries:
    • Through their FinTech ties, the UK and India will aim to facilitate the flow of faster and cheaper remittances.
    • Through a new financial markets dialogue, the finance ministers agreed to address regulatory barriers and enable the free flow of capital between the UK and India.
    • The opportunities are huge — for example, in insurance where the ministers have agreed to explore ways to boost investment further.

Conclusion:

  • Through a raft of new initiatives, including joint investment to lead pioneering research on Covid-19, the UK and India are setting out a strong economic agenda for the future.
  • The two are well positioned for another prosperous 10 years of relationship — and for a 21st century partnership which leads the way on global recovery.

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