India a ‘huge growth opportunity’: UK-India investment pact can boost FDI, says former FTA negotiator

India is emerging as one of the world’s biggest investment opportunities, with global companies increasingly backing its long-term growth story despite carefully weighing risks and returns, according to Harjinder Kang, the UK’s Trade Commissioner for South Asia. The executive said that a proposed Bilateral Investment Treaty (BIT) between the two nations could further strengthen investor confidence, provide greater certainty to businesses and help attract higher foreign direct investment (FDI) into India.Speaking to ANI on Wednesday, the day the India-UK Comprehensive Economic and Trade Agreement (CETA) came into force, Kang said multinational corporations evaluate investment destinations based on the balance between risk and long-term growth potential, with India continuing to stand out as an attractive market.“People are making their judgments on India based on return on risk. It’s a huge growth opportunity,” Kang said, adding that companies assess growth prospects alongside investment risks before committing capital.The India-UK Comprehensive Economic and Trade Agreement came into effect on July 15, providing zero-duty access for 90.2% of Indian exports to the UK while reducing import duties in India on a range of British products.Also read | Export boost, cheaper cars & whisky: India-UK trade deal comes into effect from July 15

India-UK trade treaty

Kang said that the two countries had originally aimed to conclude a Bilateral Investment Treaty alongside the free trade agreement to provide additional safeguards for investors making long-term commitments.“What we were hoping for was to do in parallel with the FTA was a Bilateral Investment Treaty… that would have provided some degree of protection for future investments,” he said.Investment protection had emerged as one of the strongest demands from British businesses during consultations held before negotiations on the FTA began. Companies wanted greater certainty over long-term investments and a mechanism that would provide confidence if disputes arose.Although the treaty could not be concluded together with the trade pact, Kang said that discussions are continuing and both governments still consider it an important part of the wider India-UK economic partnership.“It will make a big difference that companies that have a little bit of reservation might then be feeling a bit more secure,” he said.

Investment relationship

Highlighting existing investment links, Kang said that India has already become a preferred destination for several British companies. He cited the example of a major UK healthcare company that recently established a manufacturing facility in Madhya Pradesh after assessing India’s long-term growth potential.He also said investment flows are no longer one-sided. Around 1,000 Indian companies have invested in the UK over the past four to five years, making India the second-largest source of investment projects in the country after the United States.According to Kang, a Bilateral Investment Treaty would provide greater certainty for investors in both countries and encourage more cross-border investments.He added that the implementation of the India-UK FTA should be viewed as the beginning of a wider economic partnership. While the trade agreement is expected to boost bilateral commerce, he said that investment, technology, defence, education and climate are set to shape the next phase of India-UK ties, with an investment treaty remaining an important pillar for strengthening long-term investor confidence.