INDIA INC RETAINS APPETITE FOR UK COS, CREATES 4K NEW JOBS

Sudeshna Sen, London
The Economic Times

Indian companies are still investing in the UK in droves, though the action seems to have moved to the medium and small sector. India retains its position as the second highest foreign employer in the UK, after the US, according to the 2009 UK inward FDI official data.

This year, Indian inward investors created 4,149 new jobs, with 108 new projects, up 44 percent in the absolute number of projects. Indians account for 11 percent of new jobs created by foreigners in 2008-09, out of around 35,000 new jobs.

Indians have been responsible for 7,966 British jobs in 2008-09, including ‘safeguarded’ as in jobs protected by the entry of foreign employers, at a time when the UK jobless figures peaked at over 2 million for May.

Last year, however, thanks to the mega Tata deals, India created over 19,000 British jobs, with just 75 new projects. While the number of projects has risen, the sizes have dropped. The US, still the largest inward investor in the UK, set up 621 new projects this year, but employed only 12,888 new people. It had created over 29,000 jobs last year, with only 478 new projects.

Indian investment into the UK, which measures FDI in terms of the number of jobs created and protected and not absolute value, has exponentially gone up in the recent past, rising from an almost non-existent base of 892 jobs in 2003-2004 to about 37,664 over the past few years.

India also replaced Japan as the largest Asian supplier of FDI projects this year, with significant investments in IT, life sciences and advanced engineering. Biocon established it’s European HQ in the UK and Dr. Reddy’s acquired a clinical trials unit. In the communications sector, GTL Europe opened four new offices, while engineering company Dynamatic Technologies continued to expand its operations in the UK, says the UK Trade and Investment report. UKTI is the UK government’s main inbound and outbound investment department.

Despite the recession, UK has managed to retain its position as the world’s second favourite destination for setting up new projects, second only to the United States. New projects, including establishing offices and headquarters, have gone up – 251 HQ and European head offices were set up - but this year’s results show a marked decrease in M&A and joint venture activities, down 6 percent.

Another key trend is the change in sectoral composition – creative industries emerged as the fastest growing new sector, with inward investments rising by about 65 percent, though on a lower base. Software, advanced engineering, business services, ICT and Life sciences were the other favourite sectors for foreign investors.

Reiterating UK’s stance on ‘open for business,’ Lord Peter Mandelson, business secretary said “The UK maintains the best effective regulatory environment for global investors and businesses to thrive. We have to assess the merits of regulations, to consider if there are alternatives and, if there aren’t, ensure they are smart and do not serve to suffocate businesses,” he said.