India has been the second most important foreign direct investor into the UK in 2025-26, helping create thousands of jobs. This position is likely to improve further once the India-UK Comprehensive Economic and Trade Agreement (CETA) comes into force on July 15.

The agreement, which provides duty-free access for nearly 99 per cent of Indian exports to the UK and expands market access across 137 services sub-sectors, is expected to encourage companies to establish a stronger presence in each other’s markets.

Data from the Department for Business and Trade, UK, shows that Indian companies undertook 93 foreign direct investment (FDI) projects in the UK, creating 12,687 jobs, making it the second largest job creating investor after the US, which generated 15,796 jobs through 239 projects. Germany, France, and the Netherlands followed at a considerable distance.

The UK is also emerging as an important destination for Indian overseas investments. Between May 2025 and May 2026, Indian companies undertook 830 overseas investment projects in the UK, making it the country’s fourth-largest investment destination after the US, UAE, and Singapore.

This investment momentum had begun building even before the FTA. Earlier in February 2025, the UK Government had announced a pipeline of Indian investments, including Aaseya Technologies (€25 million), Time Cinemas (€20 million), Novigo Solutions (€12 million), among several other projects.

Sector-wise, India’s outward investments continue to be dominated by financial, insurance, and business services with 4,607 projects, followed by wholesale and retail (2,599), and manufacturing (2,369), indicating where cross-border investment activity is already concentrated.

Experts believe the FTA could strengthen this momentum by converting trade relations into long-term investments.

While financial services, manufacturing and wholesale and retail are expected to remain the dominant sectors for India’s overseas investments, the FTA is likely to widen the scope of bilateral investments, said Pallavi Bakhru, Partner, Grant Thornton Bharat.

“Digital and technology services, fintech, advanced manufacturing, healthcare and medical devices, professional services and clean energy are expected to emerge as key investment drivers, supported by enhanced services access, greater regulatory certainty and stronger cross-border supply chain integration. The FTA is therefore expected not only to deepen investment in established sectors but also accelerate collaboration in high-value, innovation-led industries,” she said.

Industry bodies also expect British investments into India to gather pace. Nirmal K Minda, President, ASSOCHAM, said improved market access, lower tariffs, streamlined customs procedures and stronger support for digital trade would create a more predictable business environment. “British companies will surely look at increasing investment in India considering the rate of economic growth and magnitude of the consumption base,” he said.

Published on June 30, 2026