Indian companies are expanding their presence in the United Kingdom at a record pace, but growing regulatory complexity, higher visa costs and soaring energy prices are emerging as major challenges that could weigh on future investments, according to the India Meets Britain Tracker 2026 released by Grant Thornton UK and the Confederation of Indian Industry (CII).

The report said the Indian-owned businesses in the UK have reached an all-time high of 1,912 companies, generating a combined turnover of £105.77 billion and employing more than 203,500 people.

However, the study warns that operating conditions in Britain are becoming increasingly difficult for Indian firms, particularly in technology, healthcare, manufacturing and business services sectors.

"The UK's regulatory requirements are tightening, labour shortages and employment tax rises are pushing costs, and geopolitical tensions continue to affect energy prices, investment decisions and global supply chains," the report said.

Rising cost in deploying skilled Indian professionals

One of the biggest concerns identified by the report is the rising cost of deploying skilled Indian professionals to the UK. Salary thresholds for most Skilled Worker visas increased from £26,200 to £38,700 in 2024 and further to £41,700 from July 2025, while sponsorship compliance requirements have also become more stringent.

"The tax treatment of visa costs is becoming a critical issue for employers with mobile workforces. HMRC's current stance could increase costs and add complexity to reporting and governance," said Davyd E Fisher, Employer Solutions Partner at Grant Thornton UK Advisory & Tax LLP.

The report noted that the changes are particularly significant for Indian-headquartered technology and business services firms that rely heavily on cross-border mobility of employees for project delivery.

Energy costs add to pressure

High industrial energy costs are another growing concern. According to the report, large industrial consumers in the UK paid £228 per megawatt-hour for electricity in 2024, more than double the level in Germany and several times higher than prices in France and Sweden.

The situation has been exacerbated by geopolitical tensions and energy market disruptions. The report noted that Brent crude oil crossed $100 per barrel between late February and March 2026, while wholesale natural gas prices surged 75%, pushing up transport, fuel and production costs.

"For Indian businesses operating in energy-intensive sectors such as manufacturing, agriculture and logistics, sustained price volatility can erode operating margins and affect the viability of UK investments," the report said.

Indian companies are also facing stricter disclosure and compliance requirements following reforms introduced under the UK's Economic Crime and Corporate Transparency Act, which has increased verification standards and accountability obligations for directors.

In addition, growing scrutiny of foreign investments in sectors such as technology, infrastructure and strategic assets, coupled with evolving sanctions, data privacy and AI regulations, is making business planning more complex.

Longterm outlook remains positive

Despite these challenges, the report remains optimistic about the long-term outlook for the India-UK economic corridor. Bilateral trade between the two countries reached £47.9 billion in the four quarters ended Q4 2025, up 10% year-on-year, while the recently signed Comprehensive Economic and Trade Agreement (CETA) is expected to further boost trade and investment flows.

"The CETA offers an opportunity for Indian businesses to gain tariff-free access to the UK market," the report noted, adding that sectors such as advanced manufacturing, technology, clean energy, financial services and life sciences are likely to attract greater investment in the coming years.