Invest India, the country’s national investment promotion and facilitation agency estimates that India’s automotive market will touch $300 billion and become the world’s third-largest automotive market by 2026. Auto components’ exports from India are projected to increase 5 times in the next 10 years, says the agency’s just-released report.
The Invest India report “Leveraging the India-U.K. opportunity towards a stronger legacy” identifies the automotive sector ($222 billion in 2020) as one of the key sectors of collaboration between India and the U.K. financial services, electronic systems and design manufacturing (ESDM), textiles, food processing, chemicals and pharmaceuticals, renewable energy and defence and aerospace, etc., have been identified as other sectors of high potential for bilateral collaboration.
According to the report, India’s textiles and garments industry is expected to reach $225 billion by 2025-26 from a current market size of $150 billion (in 2021). The food processing sector is to touch $535 billion by 2025-26 (from $263 billion in 2020); the chemicals and petrochemicals market is projected to reach $300 billion by 2025; defence and aerospace are expected to reach $26 billion by 2025; pharmaceuticals will be $130 billion by 2030; and 1 in every 7 dollars spent worldwide on clean technology by 2040 will be in India.
On the potential of financial services, Invest India report says that both India and the U.K. have a well-established financial services ecosystem and are leaders in fintech adoption. “BFSI and fintech have been a key sector of investment for the U.K. and India with various bilateral institutional partnerships in this segment such as the India-U.K. Financial Partnership, Financial Markets Dialogue, Joint Working Group on Fintech. The Indian government has also taken several investment policy measures (relaxation of FDI in insurance to 74% in 2021, relaxation of FDI in insurance intermediaries to 100%) to invite greater participation in this promising sector,” says the report.
The report points out that the scale and the speed at which India is creating and expanding its physical and social infrastructure is unprecedented and offers a golden opportunity for U.K. investors. “While we are constructing 27 kilometres of highways every day (among the highest rates globally), we are also home to the world’s largest health assurance scheme, the Ayushman Bharat. Our indigenous Unified Payments Interface (UPI) has recorded the highest volume of digital payments in the world – over 5.95 billion of them just in May 2022, amounting to a value of nearly $128 billion. The multiplier impact of such large-scale developments provides a solid bedrock for deeper bilateral ties between our countries. We are currently a $ 3 trillion economy, the fifth largest in the world, actively working towards becoming a $ 5trillion economy by 2026,” says the report.
The report turns significant as India and U.K. are currently negotiating a comprehensive bilateral free trade agreement (FTA).