Even as negotiations continue to shape the India and UK free trade agreement (FTA), the evolving contours of trade between the two countries, with special focus on tech, has already seen India become the second biggest source of investment in the United Kingdom. This, with 118 new projects and creating 8,384 new jobs in 2022-23.
Chandru Iyer, UK’s Deputy Trade Commissioner of Investment for South Asia and Deputy High Commissioner to Karnataka and Kerala, believes British companies have been able to leverage India’s technology capabilities and experience.
The FTA will arrive, and when it does, growing tech collaborations will provide a foundation. The UK’s import of tech from India clocked £20.8 billion at the end of Q4 2022, an increase of 35% (or £5.4 billion) compared to 2021, according to official figures. At the same time, among the many sectors, India imported around £374.61 million worth of electronic equipment from the UK, according to the United Nations Comtrade data.
Iyer believes companies in both countries are aspirational and ambitious, something the FTA will assist. Ease of doing business will come into play then, he insists.
In a conversation with HT, Iyer, who was previously the head of business development for global professional services firm Grant Thornton’s South Asia Group, talks about how the tech collaborations between companies in both countries already have a much wider impact. One example of it is that the tech backbone for operations at all Tesco stores across the UK is managed out of the company’s Global Capability Center in Bengaluru.
In May, Tesco announced plans to enter the business-to-business (B2B) market as well, with similar solutions for retailers globally. Indian tech giant Nasscom is partnering with MIDAS (Manchester’s Inward Investment Agency) and MAG (Manchester Airports Group) for a ‘Launchpad’ that’ll support Indian small and medium tech enterprises setting businesses there.
Last month, UK’s Secretary of State for Business and Trade Kemi Badenoch had announced the global Unicorn Kingdom Pathfinder Awards for 2023 as the country breached the $1 trillion valuation in the technology sector, becoming the third country to do so after the United States and China. Northern Ireland is playing its part, Iyer says. Belfast has become the biggest hub for technology companies in the UK after London, with the region now home to more than 100 cyber security companies.
The idea is to identify the best start-ups, including in India, put them on a platform to compete with each other and find ones that’ll go for the global competition. “My aspiration is to have an Indian start-up as a winner of the first Pathfinder competition,” he says.
Also Read:Collaboration to be faster, easier with India-UK FTA: UK Trade Commissioner for S. Asia
Iyer talks to us about why he believes the focus areas in the coming years will include fintech and artificial intelligence (AI), how Indian tech companies are evolving from being service providers, the India-UK FTA’s expected impact and how Indian start-ups should approach the upcoming Unicorn Kingdom Pathfinder Awards 2023. Edited excerpts:
Q. Your views on the India and UK tech partnership as it evolves, and the emerging areas that pose the best opportunities for companies in both countries?
Chandru Iyer: There are two parts to this. Fintech is something that is a core focus for both countries. In fact, that is something that probably the UK is keen to understand a bit more about, from India such as the digital payments system India has made. It has taking giant leaps. On the UK side, it is time to see how we can leverage some of those Indian strengths.
AI is our other area of focus, and that’s definitely something we’re looking to work upon. PM Rishi Sunak in his speech talked about how we see the UK as the AI capital of the world. There are some joint initiatives with various countries, and we have AI experts as well as academic institutions focusing a lot in that area. Cyber cybersecurity is another thing that’s a big focus for the UK. That’s where we see a lot of synergies between India and the UK.
If you look at it from an India angle, and the way things are changing from that perspective, an Indian company investing into the UK was more often than not services based with its offerings. Some big names include TCS, Infosys and Wipro. But there is a shift coming through in terms of moving from services to products. Software as a service, or SAS, is an area we foresee Indian companies playing a major role in the UK in the in the years ahead.
Q. What are the key elements, or wants, for companies before they go ahead with investments in a country?
Iyer: Indian investors’ interest in the UK continues to be strong and buoyant. We are quite bullish about it in terms of how things will pan out over the next few years. The pipeline of Indian investors going to the UK is very strong. And likewise on the trade and export side, which is how we look at British companies coming to India. The investment team, which is the DIT’s mandate, has done a sterling job of helping businesses coming over here and doing well.
In terms of both the investment trade together, they support close to half a million jobs in each other’s countries. And a great example, since I am in Bengaluru, is the Tesco’s global capability centre here. It is a state-of-the-art facility and all Tesco outlets in the UK are managed from a technology perspective from here. So, that says a lot about how technology is playing the role of enabler. Or even as a catalyst for some of these large British businesses. And Tesco is just one example. NatWest has got a global capability centre in Bengaluru, so does GSK.
What I’d say is, Indian investors are doing wonderfully well in the UK. We are also seeing a lot of British companies doing a good job in India, in terms of leveraging the technology expertise and capabilities of India.
Q. How challenging is it to blend the diversity of markets together with innovation and marketplaces? What sort of a role should the governments play?
Iyer: The important thing is to be an enabler. The way we look at our role as the British government’s Department for Business and Trade (DBT) here is as enablers, as a catalyst. We don’t get into the business of the investors or tech companies, but we help fasten the process and help overcome challenges or concerns, how we can help businesses bridge that the so-called divide now.
The way Indian businesses of today are run, they are at par with any other global business. If we look at any top tech business, or even upcoming start-ups, the way they approach things is very much global in nature. The CEOs, founders and CXOs all have international experience they bring that to the table. I don’t see too much of an issue really in terms of diversity of a way of approaching doing business.
But at the same time, from an innovation perspective, that’s something that probably UK has a bit of a first mover’s advantage on. And that’s why we see a lot of our Indian investors looking to invest in the UK, which supports R&D, new ventures and initiatives. One of the strong areas of the UK is the R&D tax credit scheme, which is very lucrative not just for British businesses, but also for incoming foreign companies who want to use the UK as a base.
India also has got a similar tax credit system in place and that helps some Indian businesses do innovation here as well. But as I said, UK has a bit of a head start on that. We also see academic institutions coming into play here and playing their own part in creating a cohort of tech start-ups who then become the unicorns of tomorrow.
