As the drive for UK/Indian business cohesion marches forward, it’s important for investors, business and Governmental officials to get ‘back to basics’ and fully assess the key areas of growth for 2014.
Although glaringly obvious to many, the proximate economic climates of the UK and India compliment each other in terms of reciprocal trading benefits and it is now, more than ever, a fertile monetary breeding ground for the ambitious amongst us.
With the UK economy on the ‘up’, harbouring a skilled workforce, it needs India as a choice destination for outsourcing both services and manufacturing. On the reverse, India has the scales of economy to offer affordable outsourcing to the UK and a thirst for continued investment.
With that in mind, our key sectors to watch are: Infrastructure, professional and financial services, innovation and research, manufacturing, energy, health, education and skills.
Whilst each of these can and, on a more detailed stakeholder assessment, will be viewed in isolation, they are all inter-linked.
Without turning this brief article into a class 101 on microeconomics, one has to appreciate that where there is investment/growth in one area, there will be inevitable demand in the others. For example, if we see an increase in Indian in-country infrastructure projects then, there will be demand on the professional and financial services in delivering that project (i.e. lawyers and banks), there will be a further demand on innovation and research in undertaking the builds. The infrastructure project might well be for the purpose of housing a manufacturer. As such mass infrastructure projects develop, there will be a need to consider sufficient energy requirements. The workforce involved in the project, together with those who inhabit the project after build, will need access to health and/or have a higher capacity to pay for private health care – thus stimulating that market. Finally, with any sustained infrastructure project, there will be the absolute need for a skilled workforce to undertake the works; necessitating investment in education and skills.
Although the above is a ‘perfect world’ example of how investment in one industry can stimulate others, it does at least act as a broad barometer as to why it’s important for UK investors with a singular industry focus to carefully consider all of the above key areas of growth in India.
As the Indian economy continues to grow through a tide of foreign investment, the Indian Government will have to carefully consider how they tackle so called ‘market failures’ (i.e. necessary public amenities which, if left to the free market, would not be adequately provided for). A classic example of this is education: if the Government does not do enough to skill its own workforce to the necessary levels required as to keep-up with the rate of growth, then, because of that educational under provision, the ability to grow industry in any meaningful way will be stultified.
In summary, the world is paying witness to the Indian growth story. The UK and India have a real trade need for each other and, as such, it’s likely that we will see the two countries continue to cement their already strong trading relationship.
The key areas we have cited to watch for 2014 should be viewed both in isolation and against the wider backdrop of each other. However, more importantly, to make them key areas of growth for 2015 and beyond, the Government will need to assess the potential for market failures as to further install confidence in the market place for investors.
I hope 2014 is a fruitful year for your business and please do feel free to contact me if you would like to discuss any of the issues raised in this article – a.singh@duttongregory.co.uk
*Dutton Gregory LLP has taken all reasonable precautions to ensure that information contained in this document is accurate, but stresses that the content is not intended to be legally comprehensive. Dutton Gregory LLP recommends that no action be taken on matters covered in this document without taking full legal advice*
