Trade between the UK and India hit record levels despite the fact that the much-vaunted free trade agreement between the two countries has yet to be signed.
Exports from the UK in July (£939m) and August (£913m) surpassed £900m for the first time, putting the total volume of exports to India so far in 2022 at £5.5bn (January-August). The figure beats all full calendar years on record except 2011 (£6.4bn), according to new data compiled by financial services firm Ebury.
Imports of goods from India into the UK also hit an all-time high in August 2022, reaching £990m. Imports were in excess of £900m for seven consecutive months from January 2022, having never broken that figure before.
“India’s growing economy and demographic changes such as a growing middle-class make it likely to become increasingly important over the coming years as the UK widens its trading links post-Brexit,” said Jack Sirett, a partner at Ebury.
“A successfully negotiated FTA would put rocket fuel in trading volumes which are already rising rapidly, particularly in sectors such as automotive, agri-food, machinery and pharmaceutical industries that are keen to export to India by providing further certainty and decreasing tariffs,” Sirett said.
The UK government had pledged to sign a trade deal with India by 24 October (Diwali), but negotiations between the two countries are still ongoing. The UK’s Department for International Trade (DIT) said the two governments have “closed a majority of chapters” of the deal.
According to City AM, there has been fundamental difficulties in getting the Indian government to change its protectionist stance and to allow more British services firms access to the country.
A DIT spokesperson said: “India is an economic superpower, projected to be to be the world’s third largest economy by 2050. Improving access to this dynamic market will provide huge opportunities for UK businesses, building on a trading relationship currently worth more than £24 billion.
“That’s why we are negotiating an ambitious Free Trade Agreement that works for both countries. We have already closed the majority of chapters and look forward to the next round of talks shortly.”
India going green, new GDP growth figures show
The Indian government’s measures to cut carbon emissions and boost clean energy capacity has led to ‘green GDP’ growing faster than traditional gross domestic product, according to Reserve Bank of India (RBI) research.
Traditional GDP in India grew at an annual average pace of 6.27% and 6.61% in the 2000s and 2010s respectively, while green GDP rose 6.34% and 6.71% respectively in the same decades.
That growth contrasted with the last 30 years of the 20th century, where traditional GDP grew at a faster rate than green GDP.
Green GDP adjusts conventionally calculated GDP to include the environmental costs of economic growth. It is less than GDP if economic growth is not eco-friendly and was around 6% lower in 2019, the last year covered by the RBI’s research. At the turn of the millennium, it was lower by around 8%. A smaller deficit now means India has been able to cut down on environmental losses.
These figures were published in the RBI’s October bulletin in an article written by central bank employees Anupam Prakash, Kaustav Sarkar and Amit Kumar. The authors say that India’s green GDP figures have been on an upward trajectory, particularly since 2012.
The green GDP formula starts with annual GDP at 2015 prices, from which it subtracts various damage costs to the environment each year while adding the expenditure by the government on environmental protection.
The United Nations first proposed the idea of green GDP in 1993. However, it failed to catch on as countries such as the US, China, Norway, Australia and Canada, which flirted with the idea, were spooked by the fact that the ‘environmentally-adjusted’ GDP numbers were far lower than the conventional GDP figures. This was because the formula only focused on deducting the cost of the depletion of natural resources.
Therefore, more recently, the statistical arm of the United Nations has been experimenting with a new kind of green GDP—one that includes both the positives (such as measures to protect the environment) and the negatives. The RBI paper’s measure of G3 is more in line with this.