India and the U.K. have always had strong economic and social ties, and in recent years we have seen several of India’s most successful companies choosing the U.K. capital as the city to scale their business. Now, as the world faces an economic slowdown due to the pandemic, Indian companies are still looking at the U.K. with a focus on London for expansion opportunities.
According to a recent report by The Department for International Trade, India has emerged as the second-largest source of foreign direct investment (FDI) in the U.K., with 120 new projects creating 5,429 jobs in 2019-20. India moved up to second place from its third spot the previous year, with the U.S. ranking first and Germany coming in third.
The latest figures also show that while the number of new jobs as a direct result of foreign investment has declined as a result of the Covid-19 pandemic—a global trend as seen in other FDI reports this year—the number of jobs safeguarded by FDI increased by 29%.
India’s rise to second position reflects the confidence among Indian companies in the conducive environment and ecosystem the U.K. provides to enable businesses to thrive.
The U.K. capital also continues to attract international investment, with 638 of England’s 1,571 FDI projects choosing London for international expansion. When it comes to sectors, 50% of London’s FDI between 2015 and 2019 was in software and IT services, reinforcing its status as a leading tech hub. And in 2020, technology and telecom companies also dominated the list of the fastest-growing Indian companies in the U.K., according to Grant Thornton’s latest “India meets Britain Tracker”.
Since 2010-11, we have helped 240 Indian companies set up in London, creating over 4,400 new jobs. Fintech and software-as-a-service companies made up a considerable number on this list. And between 2015 and 2019, London came in as the second most popular city for Indian companies looking to expand internationally, based on the number of projects (after Dubai).
It is our mutual strengths in technology and innovation that has led to several of India’s high-flying tech companies choosing London. Last year we saw Indian ride-sharing unicorn Ola announce its London launch, and IT giant Infosys open its first design and innovation studio in the heart of the city’s tech hub.
Apart from fintech, FDI deals fuelled a surge in some of London’s other sectors like AI, deep tech, and cleantech. In fact, healthtech, edtech, and cleantech companies have shown a lot of interest in London following an acceleration of demand for these technologies during the pandemic.
Indian entrepreneurs also benefit from London’s favourable R&D tax credits and one of the world’s most competitive corporation tax rates at 19%. And London’s time zone allows companies to do business all over the world on the same day, providing a gateway to large consumer markets.
Grant Thornton’s 2020 “India meets Britain Tracker” highlights the significant contribution of Indian companies to the U.K. economy, with 54% of the 72 fastest growing Indian companies in the U.K. based in London. Last year, a U.K.-India tech hub was also launched in London to promote cross-border technology transfer in startups and encourage bilateral investments in fintech, AI, blockchain, and smart cities.
We have seen collaboration happening between business communities in India and the U.K. during the pandemic too, as businesses adapt and innovate to tackle the effects of the Coronavirus. Earlier this month, a new bilateral medtech partnership was struck between the U.K. and Indian governments to plug the gap between demand and supply of ventilators and essential medical equipment.
I am confident that collaboration between India and the U.K. will continue, with Indian businesses looking to London as the city to scale quickly, and the U.K. acting as a launchpad to the rest of Europe and beyond.
Views are personal. The author is chief representative for India at London & Partners.