TDespite the uncertainties of Brexit and the corresponding meltdown in British politics, the UK economy remains resilient and continues to attract significant foreign direct investment (FDI). In fact, it remains within the top 5 most attractive destinations in a global economy which has witnessed a significant slowdown in FDI activities recently, partially due to the continued interest from both Indian businesses as well as high net worth individuals. Following the United States and Germany, India continues to be the third largest source for FDI into the UK in 2019.
According to the recently released 2019 Grant Thorton-CII tracker has Grant Thornton, 842 Indian companies are now operating in the UK, compared to 800 in the year before, generating cumulative revenues worth 48 Billion GBP annually and with the number of personnel close to 105,000.Data from the Department of International Trade suggests around 120 deals originated in India in 2017-18 which has led to more than 5000 new jobs while protecting around 500 old ones.
The manufacturing sector led the way with four deals and total investment into the sector reaching US $177 million.Indian disruptors and innovators continue to find the UK an attractive market due to the country’s leadership in areas such as Fintech, Health Tech, high-end advanced manufacturing and of course,creative technology – not to mention the fast-evolving energy and associated sectors. For example, Bharat Forge’s 10 Million GBP foray into the UK electric vehicle industry with its investment in Tevaa Motors.
It is also interesting to see homegrown Indian disruptors now taking on global giants in the cab hailing business as well as online travel/accommodation space respectively, with Ola and Oyo Rooms in the UK. The former has set out its initial services in Manchester and South Wales, while the later has entered into the UK hotel market in 2018, with aims to have properties in 10 UK cities by 2020. The UK energy sector was boosted by over $150 million (USD) Indian investment with EESL Energy acquiring Edina Power Services; and Aban Offshore Limited acquired a 100% interest in the United Kingdom Continental Shelf (UKCS) production licence P198.
Investments have not been limited to Indian businesses; a recent survey of high net worth Indian families and individuals demonstrated that almost 3 out of 4 felt that UK was the preferred destination for real estate investments. The close cultural relationships, the strong Indian intergenerational diaspora and UK’s technology prowess, backed by a stable legal and political structure, in addition to the opportunity to do business in English have ensured the British Islesremain an attractive destination for Indian money.
The relatively lower exchange value of the Sterling, from its pre-Brexit referendum, has also provided an impetus to foreign investors, including Indians, to proactively seek out investment opportunities in the UK.However, the Brexit uncertainty, the failure of the London Mayor to tackle the rising crime epidemic (especially knife crimes) in the city, along with the perception that UK wants Indian money and not Indians are threats that could easily undermine the attractiveness of the UK as an FDI destination.
India Outbound
May 31, 2019
source https://indiaoutbound.org/india-remains-a-top-foreign-direct-investment-source-for-the-united-kingdom/
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