Commonwealth of Ideas: India Lends Sterling Lessons to the UK

As India surges ahead with a projected GDP growth of 6.5 percent in FY26, its economic resilience and reform-driven momentum offer valuable insights for the United Kingdom, which continues to grapple with post-Brexit stagnation and inflationary pressures. The recently signed India–UK Free Trade Agreement (FTA) not only strengthens bilateral ties but also highlights India’s strategic approach to trade, innovation, and inclusive growth—elements the UK could emulate to reinvigorate its own economy.

Key takeaways from India’s economic model  

1. Reform-led growth and fiscal discipline  
   - India’s consistent focus on structural reforms—such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and digital public infrastructure—has streamlined governance and improved investor confidence  
   - Fiscal consolidation efforts, including targeted subsidies and rationalized spending, have helped maintain macroeconomic stability despite global headwinds  
   - The UK, facing rising public debt and sluggish productivity, could benefit from similar reform-driven fiscal strategies

2. Digital infrastructure and financial inclusion  
   - India’s Unified Payments Interface (UPI) has revolutionized digital transactions, with over 10 billion monthly payments processed seamlessly across urban and rural areas  
   - Initiatives like Jan Dhan Yojana and Aadhaar have expanded financial access to over 400 million previously unbanked citizens  
   - The UK’s fragmented digital payment ecosystem and limited financial inclusion in underserved communities could be addressed by adopting India’s scalable tech-first approach

3. Youth-centric employment and skilling  
   - With the world’s largest youth population, India has invested heavily in skilling programs like Skill India and PMKVY to align workforce capabilities with industry needs  
   - The ServiceNow AI Skills Research 2025 predicts 3 million new tech jobs in India over five years, driven by Agentic AI and digital transformation  
   - The UK, facing talent shortages in tech and manufacturing, could replicate India’s skilling models to future-proof its workforce

4. Trade diplomacy and strategic diversification  
   - India’s exit from RCEP in 2019 marked a pivot toward high-value bilateral deals, culminating in the India–UK FTA that eliminates tariffs on 99 percent of Indian exports  
   - The agreement opens up UK markets for Indian textiles, pharmaceuticals, marine products, and IT services, while offering British firms access to India’s vast consumer base  
   - The UK, still recalibrating its trade strategy post-Brexit, can learn from India’s targeted, sector-specific trade negotiations that balance domestic interests with global integration

5. MSME empowerment and grassroots innovation  
   - India’s MSME sector contributes nearly 30 percent to GDP and 49 percent to exports, supported by schemes like Mudra loans, e-marketplaces, and credit guarantees  
   - The UK’s small business sector, though vital, faces challenges in accessing finance and scaling operations  
   - India’s bottom-up innovation and policy support for micro-enterprises offer a blueprint for revitalizing UK’s local economies

6. Climate resilience and green growth  
   - India has committed to net-zero emissions by 2070 and is investing in solar, wind, and green hydrogen through the National Green Hydrogen Mission  
   - The UK, while a leader in climate policy, faces implementation bottlenecks and public resistance to green transitions  
   - India’s community-driven renewable energy models and low-cost clean tech adoption could inspire more inclusive climate strategies in the UK

Implications for bilateral cooperation  

The India–UK FTA is more than a trade pact—it’s a convergence of economic philosophies. India’s emphasis on inclusive growth, digital empowerment, and strategic agility offers the UK a mirror to rethink its economic priorities. As both nations deepen ties across education, defense, and innovation, the UK has an opportunity to absorb lessons from India’s dynamic development model and apply them to its own economic revival.

Sources: Times of India, EY India, Vision IAS, The New Indian Express, Business Today, Financial Express, Government of India Press Releases, ServiceNow AI Skills Research 2025 conducted with Pearson