UK recovery attracts Indian cash

Indian companies are ploughing investment into the United Kingdom as the country’s economy continues to recover.

From Tata Steel and Jaguar Land Rover, which are owned by the Indian conglomerate Tata Group, to IT outsourcing firms and Mumbai luxury property developers, India has a growing presence in the British business world.

India is the fifth-largest investor into the UK, accounting for more than half of its investment into Europe, says the UK government.

The British chancellor, George Osborne, and the foreign secretary, William Hague, last month visited India on a trade and investment mission, meeting Narendra Modi, the Indian prime minister.

“We want to see more Indian companies coming to Britain, following in the footsteps of the likes of Tata,” the two politicians wrote in an editorial in The Times of India. “We want to help India access international markets for investing in infrastructure.”

For Indian firms, the lure of the country includes additional revenues, a gateway to the rest of Europe, and research and development opportunities, companies say.

Cipla, a major Indian pharmaceuticals company based in Mumbai, recently revealed plans to inject £100 million (Dh616.1m) into its UK subsidiary to fund the launch of a range of medicines, including respiratory and cancer drugs, as well as to conduct research and clinical trials.

Rajesh Garg, Cipla’s global chief financial officer, says its affordable medicines would “contribute cost-effective solutions” for the British national health service (NHS).

It has also emerged that Mahindra, an Indian car company, is investing £20m into the UK to develop electric-car technology, with the Indian firm’s first electric vehicle expected to go on sale in the UK next year.

There has been mounting evidence of signs of improvement in Britain’s economy in recent months after the financial crisis in 2008 plunged the country into a long and deep recession.

The UK economy managed to surpass its pre-recession peak in the quarter between April in June, posting growth of 0.8 per cent, according to the UK office for national statistics.

“Indian companies are gearing up to invest in the UK as the region has started showing signs of recovery from economic slowdown,” says Rohit Sinha, the head of sales at Blue Star Infotech, a technology consulting and services company listed on the Bombay Stock Exchange and the National Stock Exchange of India.

Indian IT outsourcing companies are expanding in the UK as they look beyond the United States to try to grow their revenues.

“Europe is the next-biggest market that still remains untapped,” says Mr Sinha. “With intense competition in US markets, companies are now increasingly focusing on the European markets in their endeavour to mitigate risks.”

To that end, the UK is strategically vital to their expansion plans as they aim to increase their business in Europe, he says.

The company has a team of 15 people at its London office, which it set up 15 years ago.

“Owing to the resurgence of the European markets, we plan to increase the strength of our UK office to 30,” Mr Sinha says.

He says there is “huge market potential in the UK for IT solutions and services”.

“This trend can be attributed to the revival of the UK markets, and enterprises are keen on adapting new age technologies that will help them to capitalise on this trend,” he adds.

“The most significant aspect is that there is an ease in doing business in UK and we anticipate more and more business opportunities from this market.”

Nihilent Technologies, an IT firm based in Pune, is also aiming to expand its presence in Britain.

It has an office in London that employs about 50 people and dedicated offshore teams in India that serve its UK clients, says Abhinav Pandey, the head for UK and Europe at Nihilent Technologies. “Yes, we are looking to expand our operations in the UK.”

“We are now moving beyond traditional IT services and are ready to offer our expertise in today’s latest technology areas, including social, mobile, analytics and big data, cloud computing, and others.”

He says good infrastructure and a good environment for “cutting edge” research and development make it an attractive destination for their business.

Indian expansion is not without controversy, however. Some critics have raised concerns about job losses in the UK and the quality of service as firms outsource back-office and call-centre positions to India. The energy company npower, for example, in November cut almost 1,500 jobs in the UK – or 15 per cent of its workforce in the country – to move the positions to India.

But Indian companies also contribute significantly to the country’s economy.

“By establishing local partnerships, we are planning to grow by local hire and are investing to create appropriate wealth towards UK’s economy,” Mr Sinha says.

The most high-profile Indian organisation in the UK by far is Tata Group, which has 19 companies across Europe with 60,000 employees in areas ranging from engineering to consumer products. Among its UK enterprises, Tata owns the popular British tea brand Tetley, which it acquired for £271m in 2000. Tata bought the British car maker Jaguar Land Rover from the US car company Ford for US$2.3 billion in 2008. The deal was met without controversy in terms of an Indian company taking over two of the country’s biggest car brands. But it was met with some scepticism as it took place during the global financial crisis and was followed by plunging sales. Tata managed to turn the business around, however.

Tata Steel has invested hundreds of millions of pounds in steelmaking and processing facilities in the UK. But last month the company cut 400 jobs at one of its British plants, citing a need to restructure amid high business rates and energy costs in the UK. This followed hundreds of job cuts made by the firm at plants in the UK last year and the previous year.

On Tuesday, however, Tata Steel announced it was boosting activity in its Teesside Service Centre, a steel sections processing facility that it set up in 2012 and in which it has invested £8.5m.

The property sector in the UK is also gaining popularity among UK investors. Lodha Group, a luxury property developer, has snapped up two prime property developments in London in recent months.

In turn, UK companies are eyeing India’s growing economy.

The UK supermarket giant Tesco at the end of last year became the first chain to gain approval to move into India following a reform to India’s foreign investment policy on multi-brand retail. Tesco is planning to invest $110m to set up a chain of shops in a joint venture with Tata Group.

The British government is eager to bolster the historic trade ties between the two countries, and during the recent mission to India it outlined hopes for British construction and defence companies to win contracts in India.

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