Money flows into resurgent British economy

Shrewd Indians invest in UK

India is now the fourth largest investor into the UK, according to the latest foreign direct investment figures released by the British government in a high-profile new report. UK-Indian business seems set to become an even more important part of both countries' economies.

The figures were featured in the UK Trade and Investment's '2012-13 Inward Investment Annual Report.' They reveal that 89 Indian investment projects had helped create as many as 7,255 jobs in Britain. India has risen to fifth place in the top five inward investor economies while China, active in 70 projects, has slipped down to sixth. The US still leads with 396 projects yielding 48,802 jobs.

“UK Trade and Investment has led an improvement in the impact and senior-level business engagement in overseas trade visits,” the report notes. “The UK is the location of choice for Europe-bound investors. Our aspiration is to become the number one or two European destination for foreign direct investment from emerging markets”

The UK saw a total of 1,559 investment projects secured over the last year, marking an 11% increase over the previous year. These are estimated to have brought with them 170,000 jobs to the British economy, 51% higher than in the previous year. Of these, nearly 60,000 were new jobs and 110,000 existing jobs were safeguarded.

“The UK has received a major vote of confidence from foreign investors confirming that the UK remains a world leading business destination,” said UK Trade and Investment minister Lord Green. “Attracting foreign investment is an important element of the UK government's economic and growth programme and UKTI will continue to work with companies to help create a globally attractive, highly competitive and truly international economy.”

The latest figures come on the back of London-specific foreign investment figures released last week, which established India as the second largest investor into the city after the US. There are 28 Indian companies which generated 429 additional jobs for the London economy in the last year alone.

London open for Indian business

London mayor Boris Johnson has described the post-Olympic surge in Indian investments into Britain as 'phenomenal.' Marking a year on since London hosted the Olympic Games in July 2012, he also highlighted the role played by Tata Motors in the resurgence of Britain's automotive industry.

“The story of Indian investment in Britain is absolutely phenomenal,” Johnson said. “The UK is set to become the number two car producer in the whole of the European Union, largely thanks to Indian investment in the UK. That is a fantastic synergy and we are very, very keen to encourage it.”

According to recently released UK Trade and Investment figures, India is now the second-largest investor into London as a result of the investment fervour generated by the London 2012 Games. India has beaten Chinese foreign direct investment figures to emerge as the fourth-largest investor with 89 Indian projects creating an estimated 7,255 jobs in Britain.

The mayor has a business and promotional organisation called London & Partners that visited India in November 2012. Asked if this generated the Indian investment boost, Johnson was unsure.

“I had a good trip to India but that the rise in investments was in some way an after-shock effect of that particular trip, I wouldn't say,” he replied. “But we are very keen to build up our intensified links between London and India and I will certainly be planning another visit in the next 18 months.”

The mayor was joined by Britain's minister for Sport, Hugh Robertson, who announced plans for a new indoor ski facility to be built next to the Olympic Park in Stratford, east London, as well as £67.5-million worth of contracts awarded for Olympic stadium redevelopment.

“One year on from London's Olympic and Paralympic Games, we are defying the sceptics who prophesied a herd a white elephants,” Johnson added. “Stratford's status as a stunning new destination is confirmed by Westfield's plans for a world-class indoor ski centre. This underscores the massive confidence in this area from investors.”

Rupee's fall yields unexpected bonus

News that the rupee continues to struggle against the dollar and the slide of the growth rate need not be bad news for foreign investors. The Indian government has taken a decision to ease foreign direct investment norms for a number of key sectors in the hope of attracting capital inflows.

Telecommunications is the most important sector, with single-brand retail as well as oil and gas among some of the other focus areas. The move comes as part of a fresh wave of economic reforms in the country that may include a hike in the foreign direct investment sector from 26% to 49% in response to long-standing demand by global insurance giants.

In addition, the procedure to invest in the petroleum, natural gas and oil refining sectors has been relaxed. Companies no longer have to seek prior government approval, although the limit of 49% on foreign direct investment will continue. Any investment above this figure in the single-brand retail sector will need the approval of the Foreign Investment Promotion Board, although the government still allows 100% of foreign direct investment.

The commerce and industry ministry announced that 100% of foreign direct investment had been cleared for the telecoms industry. This will allow companies such as Vodafone, Telenor and Sistema to operate in the country without requiring an Indian partner. The government will also approve any foreign investment proposal beyond 26% in the defence production sector, provided that it involves state-of-the-art technology.

Indian industry has shown its approval of the latest set of reforms. “This really helps in terms of improving our revenue and our investment. It also helps Indian companies to grow,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry.