The UK has become the largest single western investor in India after strengthen its investments in the emerging powerhouse, according to an economic study.
The CBI and Grant Thornton India’s Sterling Assets: Britain Meets India report also found that British firms have created over 422,000 jobs in India since the turn of the century.
Foreign direct investment (FDI) which flowed into India from the UK was estimated to be $50.57bn between 2000 and 2018.
The UK directly invested $26.09bn in India – increasing its investment by $847m between 2017 and 2018 – representing 7 per cent of all FDI into the country.
Close to two fifths of British companies made new investments in India in 2017.
The UK is the fourth largest investor in India and remains the largest investor into India outside of South East Asia and Africa.
However, the UK is no longer the largest G20 investor in India with Japan narrowly overtaking Britain.
It is though substantially ahead of Germany and France, who only contribute 3 per cent and 2 per cent in FDI respectively.
Manohar Lal Khattar, Chief Minister of the Northern state of Haryana, earlier this year visited Yorkshire to strengthen ties between the two nations.
He said there was “a lot of enthusiasm” about the Northern Powerhouse in India and added that both British and Indian companies could help each other with their expertise.
“There are a lot of industries such as the pharmaceutical industry, who can come to India. We offer them the red carpet,” Mr Khattar said. “At the same time there are a lot of issues related to technology, which the UK can benefit from.”
British businesses have created 422,524 jobs in India since 2000 with 51,188 new private sector jobs established from 2016 to 2018 – a 14 per cent rise on the previous 18 months.
Shehla Hasan, CBI India director, said: “It’s fantastic to see the economic relationship between the United Kingdom and India blossoming. Whether it’s the fact the UK is the largest western investor in India or the more than 422,000 jobs created by British business since 2000, it’s clear the economic ties between our two countries are going from strength to strength.”
India’s population of 1.35 billion and its burgeoning middle class has been a key factor in British businesses being attracted to the country, the report said.
The availability of talent and the current Indian Government’s business policies and reforms are also cited as reasons for British business growth.
Vishesh C. Chandiok, CEO of Grant Thornton India, said: “As the sixth largest economy in the world and as the most improved country on the World Bank Ease of Doing Business (EODB) Index, India is now firmly placed as a very attractive investment destination.
“Continued investment by British companies in India is a testimony to India’s growth as a vibrant economy.
“I believe that with a continued focus on inclusive and progressive reforms, through the use of technology, India is set to leapfrog to the third largest economy and top 50 in EODB around 2025.
“This should open up numerous trade and investment opportunities for mid-sized businesses from Britain, which remains a massive opportunity for future growth.”
UK investment continued to be spread across India, with more firms choosing to invest in southern India as of late.
Vital future trade partner
India will be a “vital” trading partner as Britain prepares to leave the European Union.
Shehla Hasan, CBI India Director, said: “There’s no question that India will be a vital trading partner as the UK charts a new future outside the EU.”
The opportunities in India, ranging from healthcare to FinTech, play to British strengths, Ms Hasan added.
Over half of British firms in India, 56 per cent, are in the services sector, and over a third, 36 per cent, are in the manufacturing sector.
The chemicals sector has received the lion’s share of British investment in India since 2000 at $12bn, followed by drugs and pharmaceuticals at $8.8bn.