UK can be a crucial funnel for the capital India needs: Minister Dominic Johnson

As negotiations continue to structure the India and UK free trade agreement (FTA), the technology sector will take a lead role for both countries in the coming years.

The Indian economic landscape is “red hot”, which will help UK’s aspirations to develop London as the global tech capital, said Lord Dominic Johnson, UK’s minister of state in the department for business and trade.

ohnson says the human element in both countries knows either market very well. That is part of the three advantages India has, including the changing economic landscape, new concepts such as the scale of implantation such as UPI or unified payments interface, and deeply sophisticated industries.

The scope is much wider, across manufacturing, research and developments, across verticals including technology, artificial intelligence (AI), automotive manufacturing and sustainable tech. According to Nasscom’s data from earlier this year, India has become the third largest tech start up ecosystem in the world, after the US and China.

UK Prime Minister Rishi Sunak has already outlined plans for regulation of artificial intelligence (AI), becoming the first country to do so, amidst increased focus on sectors such as fintech, clean tech, technology research and automotive manufacturing. “There’s a fundamental national endeavour to integrate the economy in the world,” Lord Johnson adds perspective, to UK’s increased global tech outreach.

Earlier on Monday, there was confirmation that round 10 of the trade negotiations between India and the UK have concluded, covering 10 policy areas.

Trade between India and the UK has been on a consistent upward curve. UK companies invested £19 billion in 2021, and at the same time, Indian businesses invested £9.3 billion in the UK. According to official figures, UK services exports to India were £6.7 billion in 2022, an increase of 46% (£2 billion) from 2021.

“I believe India has reached an economic escape velocity, and it’s just red hot and very exciting. India’s got a burgeoning, very well-educated middle class and a number of structural governmental benefits that are probably to the fore,” says Lord Johnson.

Considering London is called the fintech capital of the world, India’s implementation and scale of the UPI digital payments system, has created considerable excitement.

According to latest numbers by National Payments Corporation of India’s (NPCI), India clocked its highest-ever number of transactions in May, at £9.41 billion valued at ₹14.30 trillion. This is a 58 per cent increase in transactions, year on year in terms of volume, as well as a 37 per cent increase in value of transactions.

The importance of Indian investments in the UK, which will have a bearing on the FTA as it is being drawn up, are highlighted by Lord Johnson. “I look at fintech and edtech as two very important points. The relationship with companies such as Mphasis, Tata Consulting, and some other Indian outsourcing companies have really helped power the UK economy,” he says.