Channel: Investment

18 May, 2010
Britain’s love for curry carries through in its investments into India
The UK’s love for curry seems to be growing with great fervour. From 2006-08 a significant number of investments originating from the UK that India received was in the Foods sector, and rather surprisingly making it one of the most prolific sectors where UK companies are enjoying successes in India.

In this time period (2006-08) the net investments into the Foods sector (GBP 340m) was more than 12 times the net investments into the Financial Services sector (GBP 27mn). This is in line with the sector that had the largest increase by value of UK’s FDI positions overseas. The manufacture of Foods sector rose to GBP 81.4bn, up 52% from previous year according to the Office of National Statistics.
 
The largest 5 sectors accounted for 67% of UK’s total FDI around the world in the year 2008. These are:
i.   Financial Services
ii.  Mining including oil & gas
iii. Transport and Communications
iv. Chemicals, plastics and fuels
v.  Retail/Wholesale trade

Whereas the sectors that accounted for most British investments into the Indian market in the year 2008 were:
i.  Food Products
ii. Financial Services
iii. Transport and Communications
iv. Real Estate and Business Services
v.  Retail/wholesale trade

Therefore the UK’s investments into India are more or less in sync with its other major investments overseas. The two sectors of the top 5 where UK did not account for significant investments into the Indian market are:  mining (including oil & gas) and Chemicals.

The top 5 sectors that received FDI in India in the financial year 2008/09 were:
i.  Services (including financial and non-financial)
ii. Housing and Real Estate
iii. Telecommunications
iv. Construction activities
v.  Computing – Software and Hardware
 
UK companies are generally present in most of the top 10 sectors that received FDI in India except petroleum & natural gas and chemicals which co-incidentally also make up the bottom two of the top 10 sectors that received FDI in India both in the financial year 2008/09 as well as in cumulative terms.

UK companies continue to face major challenges in the extractive industries given the tough investment climate in India particularly related to evolving Government policies, difficulty in getting environmental clearances and access infrastructure. In the chemicals sector they face fierce competition form of major incumbents such as Reliance Petrochemicals.

So overall the UK companies are able to set up their operations in India in line with the sector expertise generally available within the country. These sectors are also aligned with the investments that India is receiving from other nations. However the investment level of UK companies in India is nowhere near what they invest in other markets as they continue to face regulatory hurdles or lack of appetite.

 
 

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