Given its penchant for expanding its footprint overseas, India Inc has emerged as the second biggest foreign investor in the United Kingdom, shows a latest study.
Global consultancy and research major Ernst & Young said today that India had become the second most important source after the US for inward investment into the UK with nearly three-fold jump in the number of projects announced by Indian companies there in the first half of 2006.
The UK captured over half of all projects announced by Indian companies into Europe in the first six months this year, shows the latest issue of E&Y European Investment Monitor, released here today.
While US firms announced 145 investment projects in the UK in first half of FY '06, up from 102 a year ago, projects announced by Indian companies nearly trebled to 21 from 8 in the year-ago period.
The UK had consolidated its position as the most attractive destination for foreign investment in Europe, with a jump of over 30 per cent in the number of projects announced in the first six months of 2006 to 315 from 236 in 2005, E&Y said.
The report said Indian and US investments had been among the primary drivers of the foreign investment in the UK and Western Europe.
E&Y regional development director Nigel Wilcock said, "Indian companies need to gain clients from Western Europe and are therefore putting sales offices and also customer support activities close to their customers as a conduit to helping growth in India."
Some companies are also expanding their core business process activity overseas, he added.
Wilcock said: "The Indian economy is growing rapidly and its achieving this through a rapid expansion in the provision of business services - call centres, business process outsourcing and financial-shared service centres as well as soft ware development."
According to the report, Europe witnessed a 25 per cent jump in the total number of inward investment projects from 1,144 in the first six months of 2005 to 1,432 over the same period in 2006 with Western European countries being the principal beneficiaries."
The rise had been driven by a 40 per cent increase in investment projects from the US as well as a three-fold increase in the number of projects from India, it added.
The business services and software sectors showed particularly strong growth in the period, while there was also an increase in projects in other more traditional industries like machinery and equipment and chemicals.
Service sector projects continued to favour Western European locations but were increasingly skewed towards major urban centres. Investment continues to concentrate on London and other premier European cities, E&Y said. NUMBER GAME 50% Projects captured by UK of the total Indian ventures in Europe in first six months of 2006 21 The total number of projects announced by Indian companies — up nearly three times from 8 in first half of 2005 30% Jump in number of total projects bagged by UK, making it the most attractive investment destination in Europe