Indian Investments in the UK Remain Robust
Britain’s exit (Brexit) from the European Union has significant ambiguity for both UK businesses and international investors alike. Indian investors have a high interest in the UK in terms of investments. The United Kingdom too is considering strengthening trade and investment with non-EU countries.
India being one of the fastest growing economies in the world and a member of the Commonwealth has captured the UK’s attention once again. As a result, during 2018, the UK and India continued to develop their long-established economic and trading partnerships.
The CII-Grant Thornton ‘India Meets Britain’ Tracker
To study Indian investments in the UK, CII and Grant Thornton India have been bringing out a tracker, ‘India Meets Britain’ Tracker, which presents trends of Indian investments in the UK to identify the fastest-growing companies according to percentage revenue growth year-on-year, as well as the top Indian employers. It showcases the scale, business activities, locations and performance of Indian-owned companies making the biggest impact in the UK.
So far, six editions of the Tracker have been released and the 2019 report is highly informative and significant for the collaboration of Indian businesses in the UK.
To be included in the tracker, Indian-owned corporates must be headquartered or have a significant base in the UK, with a minimum two-year track record in the UK. They should have a turnover of more than GBP 5 million and a year-on-year revenue growth of at least 10%. This year had 62 such companies.
Why the United Kingdom?
UK is attractive because of several reasons, especially its business climate. Other factors such as good security, education and the opportunity to do business in many sectors attract Indian investors. Low rates of corporation tax and the ease of doing business in the UK also remain significant draws. Consequently, the number of Indian businesses increased from 800 to 842 in 2019.
An increase in M&A transactions, driven by companies seeking to buy technology, expand market shares and diversify has now hit a record high of USD 90 billion in 2018.
Thirty-five per cent of these ‘tracker’ companies are from the technology and telecom sector. The ambitious new tech partnership agreed between India and the UK in April 2018 will drive further growth in this key sector. This has given rise to the ‘FutureTech Festival’ which aims to promote Britain and India as major technology innovators and trading partners. TechUK and The National Association of Software and Services Companies(NASSCOM), the two leading technology bodies in the UK and India respectively, launched the UK-India Tech Alliance. This initiative seeks to improve skills and new technologies and assist in policy development, besides encouraging innovation.
Engineering and manufacturing companies account for 16% of the ‘tracker’ companies, showing an increase of 6% from 2014. Constantly evolving, this sector is driven by the development and increasingly widespread adoption of technologies such as artificial intelligence (AI), robotics and the internet. These companies have an opportunity to develop the highly skilled work force and digital infrastructure that will be essential to Industry 4.0 success.
Pharmaceuticals and chemicals companies also have a strong presence accounting for 15% of this year’s tracker companies. The pharmaceuticals sector is expected to be worth GBP 39 billion by 2020.
The number of people employed in Indian companies in the UK is 100,000 in 2019. According to research from Grant Thornton International, 2019 sees the highest percentage of women in senior management on record at 29% of the senior management constituted of women, thereby showing progress towards gender parity.
Moving Forward
The Indian economy is projected to reach USD 5 trillion by 2025, making it the 3rd largest economy in the world in terms of purchasing power parity (PPP) and an attractive destination for global investors, including in the UK. Meanwhile, the UK’s strengths in technology and innovation, financial services and manufacturing offer Indian businesses important opportunities to invest in and develop their reach and capabilities.
To maximize opportunities to work in Britain, India is granted the highest number of skilled worker visas outside of the EU. A new policy proposes to allow undergraduates and graduates to stay in the UK for an extended period of 6 months after graduation. This will also make it easier for students to switch to a skilled work visa at the end of their course. Investors interested in setting up businesses in the UK should look at the bigger picture, the long-term view since the opportunities are many. Both UK and India have much to offer to each other in a world of many economic changes.