18 May, 2010
UK is also largest European Union investor in India
Tables & Graphs
UK is clearly the largest investor in India of all European nations followed closely by Netherlands, Cyprus, Germany and France. However the presence of Cyprus in the top investors list is purely due to its preferential tax treaty with India. It should not be treated as the ultimate source of FDI. Given the history of UK and India it is very much the expected case that Britain will command such a position amongst all other European nations.
However UK’s position as the top investor into India is coming under threat. In the last financial year 2009-10 it dropped to the 9th largest investor into India, ahead of France but behind Germany. Given India’s current appetite for infrastructure investments, both France and Germany stand to gain fair amount. German companies are vying for major construction contracts and companies in France are already lining up to develop and maintain a number of nuclear power plants in India.
UK companies have had a fair run but given recent trends depict that ongoing financial crises at home is having a severe impact on their international expansion plans. Some major UK financial institutions have already scaled back operations in India significantly.
In cumulative terms, UK has thus far invested USD 5.75 bn in the time period Apr 2000 – Feb 2010 accounting for about 5% of India’s total FDI received in this period. Mauritius accounts for 43% of foreign investments into India. Clearly a number of UK investments could also be flowing through Mauritius into India but that is fairly difficult to ascertain.
The only country that is ahead of the UK as a source of direct FDI is United States which accounts for about 9% of investments India received in the last decade.
The only nearest competitor for UK from Europe that invests into India is Netherlands. There are certain cases where Netherlands has also been used for tax efficient investment transits but for most part a number of industrial investments have originated from that nation. Other bigger European economies such as Germany, France and Italy have still some catching up to do with the UK.