In a significant development, business transactions between the UK and India have surged dramatically over the past nine months, just ahead of the resumption of trade discussions slated for January.

According to data from HSBC UK, payments made by clients in the UK to their counterparts in India have risen by 32% in the nine months leading up to October.

Even more notable is the rise in payments received by UK clients from India, which has soared by an impressive 121% during the same timeframe.

This data emerges as the UK government aims to solidify the existing strong ties with India. Recently, Sir Kier Starmer announced the continuation of UK-India trade discussions for the upcoming year, following a significant meeting with Indian Prime Minister Narendra Modi at the G20 summit.

“The trade between our nations is robust and mutually beneficial,” stated Stuart Tate, head of commercial banking at HSBC UK. He highlighted factors such as India’s growing population, persistent urbanization, increasing affluence, and extensive infrastructure investments—all of which present opportunities for UK businesses.

Tate elaborated that UK firms are well-positioned to contribute, whether through civil engineering for infrastructure or capitalizing on the skilled workforce available in India’s service sectors.

One example is Global Metcorp, a UK trading company specializing in scrap metal and raw materials, which identifies India as one of its primary export markets.

According to Ashish Chaudhari, director of Global Metcorp, “The demand for scrap metal in India and neighboring regions has remained consistently robust over the years.”

Moreover, the expanding middle class in India is driving an increased appetite for British products.

Vineet Sharma, managing partner at Paritra Investment Research, a hedge fund that focuses on consumption patterns in Asia, remarked, “The potential for UK exports to India is immense, particularly in two sectors: premium Scotch whisky, as India is a major importer of alcoholic beverages from the UK, and defense equipment.”

The robust growth of India’s high-tech manufacturing sector further enhances the business relationship with the UK. Reforms such as the Production Linked Incentive scheme, which incentivizes local production by offering subsidies contingent on meeting specific targets, have gained traction among manufacturers looking to shift from reliance on China.

A similar evolution is evident in India’s service sector, which is increasingly engaging in more sophisticated tasks beyond the initial back-end work that originally linked the service sectors of the UK and India.

Tate noted, “Global service centers have been operational for many years, primarily serving as cost-effective solutions for companies worldwide to access India’s well-trained workforce. Over time, these businesses have acknowledged the potential of Indian professionals, leading to a rising demand for more advanced service offerings.”

The strengthened relationship is also reflected in increasing levels of foreign direct investment, both inward and outward. HSBC UK reported a 36% increase in new business client referrals from HSBC India in the nine months ending October 2024.

Data from 2022 indicates that India contributed £10.2 billion to foreign direct investment in the UK, while UK investments in India amounted to £20.1 billion.

“The trend is upward,” Tate concluded, emphasizing a growing global acknowledgment of the size and potential of the Indian economy, including recognition from UK businesses.