India is liberalising its insurance sector, legal services and capital markets. It’s a great opportunity for the Square Mile businesses to invest and expand, writes Chris Hayward
India is a vital trade and investment partner for the United Kingdom. The South Asian powerhouse is home to 1.44 billion people; having overtaken China earlier this year, it is now the world’s most populous country. The Indian market, with its gigantic domestic customer base, is increasingly dynamic as the Modi government pursues an ambitious development programme to power the world’s fifth largest economy.
But like the United Kingdom, India’s economy cannot be driven by domestic consumption alone. The Modi government has cautiously sought to liberalise capital markets, the insurance sector, and legal services to entice foreign interest.
Such reforms are broadly welcomed by the City’s financial and professional services firms, hungry for the chance to develop a previously closed market.
New opportunities would help build upon the United Kingdom’s strong bi-lateral trading relationship with India, which is the second largest single investor into our country, and, as a result, responsible for 95,000 jobs. But as with most processes of large-scale reform, it hasn’t been smooth sailing.
Foreign businesses want certainty around investment protections, digital data provisions, and legal services, before entering India’s market. Though the currently negotiated UK-India free trade agreement is a matter for governments, City businesses will be looking for reassurance from both parties that these issues will be addressed. Working together, the Indian and the UK governments have the potential to break new ground for financial and professional services.
Against this backdrop of challenges and opportunities, I am currently in India meeting with senior figures across business and government to represent the Square Mile and strengthen our trade relationship.
Take sustainable finance. Given our experience, our skills and our commitment to a green future, our ambition should be for the City to become a one-stop-shop for companies looking for capital and expertise to meet their climate goals. India, whose green finance sector is in its infancy but growing fast, has a real opportunity to collaborate.
Only a couple of weeks ago the City hosted the UK-India Sustainable Infrastructure Summit as part of UK-India week. It brought together business and regulatory leaders from both countries to discuss how sustainable finance can be part of the climate solution.
On fintech, the City’s strengths are well-known. London alone has a fifth of Europe’s fintech unicorns, with more fintech workers based in our capital than either New York city or California. India is moving fast too. Its Universal Payments System is working with fintech to extend banking to 400 million new customers and decrease reliance on cash. Mutual investment in fintech will drive economic growth and inclusion for both.
And then there is the question of legal services. As a global hub of legal services, home to the world-famous Old Bailey, the Square Mile’s network of international law firms could be deployed to help India accelerate access to global markets.
The recent liberalisation of legal services in India, whilst yet to reach its full potential, must be welcomed. It will spur two-way investment, strengthen market access, and support regulatory coherence.
As India enters the next phase of its ambitious economic development, we in the City must make the case for our services to be at the heart of their economic agenda.