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India eighth biggest investor in UK

The booming Indian economy has led to sharp rise in investment by large Indian companies in Britain.

india Updated: Jan 11, 2006 13:21 IST

India has emerged as the eighth biggest investor in Britain, ahead of countries like Italy and the Netherlands, according to official figures.

Increased interest by Western companies in setting up operations on the Indian sub-continent has been matched by an investment flow from India to Britain.

Rapid expansion of the Indian economy over the past three years has led to the sharp rise in investment by large Indian companies in the country.

According to recent British government figures, Indian companies were behind 36 inward investment projects in Britain in 2004-05, compared to 28 in 2003-04 and 19 in 2002-03.

The figures put India in eighth position among the countries with investment deals in Britain. While India remained behind the US and Germany, it levelled with China and stayed ahead of Italy and the Netherlands.

Government figures indicate Indian investments led to 1,418 new jobs in 2004-05, in sixth position behind the US, Germany, Japan, Ireland and France.

The surge in moves by Indian companies showed that while the expanding Indian economy had led to more interest by Western companies in setting up operations in the sub-continent, the investment flow was by no means one way, said the Financial Times.

Measures by the Indian government to liberalise the economy since the early 1990s had made an 'enormous' difference to the ability of Indian companies to set up operations abroad, William Pedder, chief executive of inward investment at UK Trade and Investment, a government agency, told the paper.

Ajay Khaitan, an India-born manager who is head of Avatar, a London-based private equity company, believes that the trend will continue over the next few years.

"A lot of Indian businesses are particularly suited to operating globally," he said.

"In five years I expect to see 50 per cent more Indian multinationals than Chinese ones."

Baba Kalyani, chairman of India-based Bharat Forge, one of the world's biggest makers of specialist forged parts for vehicles, said his company would be wrong to base its strategy on simply capitalising on low-cost labour in India.

"We need to get access to western markets and Western technologies," added Kalyani.

In September 2005, Bharat bought Ayr-based Scottish Stampings as part of an acquisition of the Swedish engineering business Imatra, which came soon after other acquisitions in the US, Britain and Germany.

Adi Godrej, chairman of Mumbai-based Godrej, which makes a range of products from lift trucks to soap, said Indian companies' interest in global expansion had followed from a "boost in confidence" helped by rapid economic growth at home.

Indian industry had caught up a lot on Western management practices in the past 10 years, he said.

"I feel that within three to five years, Indian industry will be net exporters of capital as interest in overseas growth strengthens," added Godrej.

Other significant expansions by Indian companies in Britain have involved the pharmaceutical industry, where Britain has been strong for decades.

The recent moves follow years in which Indian-born entrepreneurs have established a presence in Britain, helped in part by the two countries' historic and cultural links.

Britain is home to the operational headquarters of Mittal Steel, the world's biggest steel company headed by Lakshmi Mittal, the Indian billionaire.

First Published: Jan 11, 2006 13:14 IST