UK streamlines FDI focus to highest-growth markets with India trade mission

The Department for Business & Trade’s (DBT) decision, under the Labour Government, to visit India before the UK’s biggest trading partner – the US, highlights its sharp focus on high-growth markets and the urgent need to stimulate the economy, according to a prominent international business lawyer.

Trade talks between the UK and India start today in New Delhi, with Business and Trade Secretary Jonathan Reynolds meeting Commerce Minister Piyush Goyal. As part of the visit, Investment Minister, Poppy Gustafsson, will address investors in Mumbai and Bengaluru, promoting the UK as the premier destination for Indian businesses.

The visit aligns with insights from a recent Freedom of Information (FoI) request regarding the Investment Minister. The findings suggest a potential shift in focus from traditional markets to faster-growing ones, such as India. Since assuming her role in October 2024, Poppy has not yet had the opportunity to visit the US. There are also apparently no future planned trips or meetings with US-headquartered businesses in Minister Gustafsson’s diary.

Bryan Bletso Head of International with law firm Irwin Mitchell, who specialises in assisting overseas businesses investing in the UK, says it perhaps highlights a pragmatic approach within the DBT and suggests that the urgency to stimulate immediate economic growth is leading to a more targeted FDI strategy.

Bryan Bletso, whose firm issued the FoI, said: “Some may be surprised that the Investment Minister hasn’t yet visited the US - UK’s largest provider of FDI. There are however mitigating factors with the US elections, but it could also indicate that the UK is looking to adopt a different and more streamlined approach where the priority is no longer traditional trading partners, but the highest performing ones which the strongest potential.

“With overseas investment growing at a slower rate according to the latest ONS data, it’s essential for the UK to examine and recalibrate its approach to FDI.

“The UK is fortunate to have Poppy Gustafsson, with her deep commercial expertise and understanding of the technology sector, leading our FDI strategy and identifying opportunities in high-growth markets where the UK excels.

“The USA is still an important partner for the UK, highlighted by the Prime Minister’s visit to Washington DC later this week. It will be without doubt the largest investor in the UK this year, but the signs are that whether it is the US or the EU, the government is keeping a close eye on traditional markets and an open mind on where FDI will come from in the future.”

India is forecast to have the highest growth rate in the G20 for the next five years and is set to become the world’s third-largest economy by 2028.

According to the DBT, India has been the second-largest source of FDI into the UK for five consecutive years in terms of the number of projects. In terms of value, the most recent statistics show a 28% year-on-year increase in investment stock at the end of 2023. At the same time, growth from the US was 0.8%.

Poppy Gustafsson was appointed as the new Minister for Investment in October 2024. The Government said it was part of a wider Whitehall ‘shake up’ to strengthen the government’s offer and partnership with businesses and investors.

The Department for Business & Trade (DBT) also recently announced a new ‘Global Growth Team’ to help drive investment. Each of the 32 parliamentarians, drawn from across the political spectrum, will champion the UK as a destination of choice for investment markets including South Africa, Mexico, and ASEAN countries.

According to the latest ONS statistics, the total net FDI position in the UK increased annually by 0.5% in 2023. This compares to 6% growth between 2021 and 2022.

You can hear more about how the UK is attracting FDI in the new season of our Business But Better podcast. We’re joined by industry experts to explore the unique advantages available to overseas investors, how the government is prioritising FDI, and the help available when entering the UK market.