CHENNAI: An increasing number of Indian companies are recognising the benefits of investing in the U.K. as evident from the U.K. Inward Investment 2005-06 report that points to a 110 per cent increase in Indian investment there over the previous year.

It places India third, in terms of investment decisions, behind the U.S. and Japan. The jump from the eighth to the third spot translated into around $2 billion investment by Indian firms on 76 projects that included new, expansion and mergers and acquisitions. The projects generated nearly 1,450 jobs.

The British Deputy High Commissioner for South India, Mike Connor, attributes the surge in investments to the "open and welcoming economy ... real commitment of the U.K. to deregulate and create an even better entrepreneurial environment."

Stating that the U.K. has had another record year — in 2005-06 some 1,220 foreign companies chose to invest in the country — in terms of attracting investment, he told journalists from The Hindu group on Wednesday that, "India has played an important part [in that]."

South India's contribution was significant with 22 of the 76 projects, an investment of $263 million, promoted by companies from the region, including Chennai's Shasun Chemicals and El Forge and Hyderabad's Satyam Computer Services, Aurobindo Pharma, Clintox Bioservices and Northgate Technologies.

The western region, however, accounted for 39 projects.

On the sector-wise profile of Indian investments, Mr. Connor says ICT (information, communication and technology) firms dominated with 26 projects followed by 12 pharmaceutical and healthcare projects, eight in financial services and six in automotive and engineering.

Indian investors are taking advantage of the British expertise in high-value activities such as research and development, science, cutting-edge technology and innovative design. "The U.K. has one of the most efficient returns on R & D investment," he declares.

Moreover, the U.K. served as a gateway to the European market of 500 million consumers. Home to most venture capital liquidity and across Europe, its capital London provides the greater access to funding, he points out.

Noting that investment is a two-way street, Mr. Connor says while British companies increasingly look at investment opportunities in India, there is a need for India to further liberalise its policies by way of an increase in foreign direct investment in the insurance sector, further opening of the legal, financial and services sectors and removing constraints on the growth of foreign banks.

On the initiatives of the Deputy High Commission to promote trade and investment between the two countries, Mr. Connor says additional manpower are being added to work on the inward investment work.

"We would have greater resources in South India ... to provide [the investors] advice to invest in the U.K.

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