The United Kingdom stands at strategic crossroads after the unexpected Brexit vote. While it continues its negotiations with the European Union (EU) and its members, it must re-engage with the rest of the world for a fair and free economic relationship.
Industry and businesses are following political developments in the UK very closely. While investors are anxious regarding Brexit, Indian industry continues to grow its footprint and deepen its impact in the UK, creating jobs, contributing to revenue and enabling the UK economy to become more competitive. India is among the top investors in UK, exceeding its investments in the EU as a whole. Likewise, the UK remains the second-largest G20 investor in India. The trade relationship too contributes to both economies.
India's growth is one of the world's foremost success story, hence many countries are looking for opportunities to partner India. With a special India-UK economic relationship, the potential for enhancing our partnership in new and emerging areas is unparalleled. Boasting of an impressive growth rate of 6.7 per cent in 2017 and expected to grow to 7.4 per cent in 2018, India is today the fastest growing economy in the world.
As per the latest Confederation of Indian Industry (CII) and Grant Thornton 'India Meets Britain Tracker' 2018, almost 800 Indian companies are operating in the UK, recording combined revenues of £46.4 billion, generating £2.25 billion of operating profits and paying over £360 million in corporation tax.
The latest CII-Grant Thornton 'India Meets Britain Tracker records 87 of the fastest growing Indian companies in the UK. These companies registered a growth rate of 192 per cent, a huge jump from the 31 per cent for 2016. Three companies contributed to this sharp increase - TMT Metals Holdings Ltd, Wipro Holdings UK Ltd and Piramal Imaging Ltd. Even without these three companies, the average growth stands strong at 44 per cent, which remains significantly high in comparison to last year. It is heartening to see a 100 per cent growth rate recorded by Route Mobile (UK) Ltd and Accord Healthcare Ltd. Other significant contributors are Secure Meters (UK) Ltd and Rico Auto Industries, which added 9 per cent and 8.8 per cent respectively to the overall revenue of companies in the tracker.
The dominant sector in the UK-India growth story is Technology and Telecoms (23 per cent), followed by Pharmaceuticals and Chemicals (18 per cent), Engineering and Manufacturing (18 per cent) and Business Services (16 per cent). Energy, Financial Services, Media, and Automotives stand at 5 per cent with Hospitality & Tourism, Transport & Logistics at a low 2 per cent and Healthcare at 1 per cent presenting a huge scope of growth.
As Indian businesses continued to explore opportunities in Europe, the UK attracted four of the 10 largest deals, with corporates taking advantage of 20 per cent fall in the value of the pound against the rupee since the Brexit vote. The biggest Indian acquisitions in the UK recorded in 2017 were: Dhoot Transmissions' acquisition of TFC Cable Assemblies, Infosys Facility Management India of Elite Cleaning & Environmental Services, and Larsen & Toubro Infotech's acquisition of Syncordis that included UK subsidiaries. A general perception especially owing to the entire immigration and mobility debate has been that Indian companies are job takers while in 2017 itself, Indian companies created 105,000 jobs in the UK.
As Indian businesses continue to enter the UK and expand their operations at steady growth rates, CII has made a concerted effort to encourage companies to expand their footprint across regions. This has been a slow yet highly rewarding process, with much more to be done.
London continues to be the leading investment destination, with more than half of all Indian companies investing in the UK. With the “London is Open” campaign, the teams of the Mayor of London and Lord Mayor have made consistent efforts to put the City of London and the Square Mile on the world map especially in attracting Indian businesses.
Noteworthy though are the continued efforts particularly of Manchester India Partnership, Northern Powerhouse, and Midlands Engine for Growth, whose success story is not yet apparent in the tracker but one that is likely to notice a marked improvement in times to come. This will be followed closely by Scotland and Northern Ireland that are exploring long-term institutional linkages with India. These will pave the way for resource pools in pockets across regions and create a lucrative business case for Indian investment. Improved air connectivity will encourage greater engagement.
Birmingham has secured some direct air routes from India and Manchester is well on its way to setting up one as well. Companies like Tech Mahindra and Hero Cycles have a strong presence in the North, creating scope for other Indian companies to explore opportunities. The supply chain for many large Indian and UK companies entails huge opportunities for many small and medium enterprises (SMEs). In recent years, many SMEs and start-ups are exploring opportunities across regions in the UK.
CII is in close contact with nearly 400 Indian companies of varying sizes with an interest in the UK. This is proof that despite the debate on an ever-changing visa regime and limiting mobility policy, the UK continues to enjoy a locational advantage for Indian companies. The UK presents a global marketplace opportunity of business deals and economic collaborations and therefore remains an important destination for Indian investments. Indian industry will continue to make significant investments but evolving policies in the post-Brexit scenario will impact plans. It is pertinent for the UK government to keep connected and engage with Indian industry in the process.