Following the visit of UK Prime Minister David Cameron to India in September 2010, a number of his cabinet colleagues have also made the journey to the world’s largest democracy in order to cement the new Enhanced Partnership for the Future signed during Cameron's visit.
“A new era of business relations between the UK and India is in the best interests of both countries," said UK Justice Secretary Kenneth Clarke, the latest political figure to take the increasingly well-worn path between London and New Delhi.
To date, the Enhanced Partnership, fuelled in part by high Indian GDP figures, has brought a 20% increase in trade, which rose to £13 billion, with exports increasing by 37%. Commenting on the figures UK Trade and Investment (UKTI) said the increases were, “significant steps towards the government’s ambition of doubling UK-India trade by 2015.” Currently the UK is the largest foreign investor in the Indian oil and gas sectors, one example of the country's importance to the Indian economy.
“Investment opportunities in India are today perhaps at a peak,” said the Investment Commission of India in 2007. “Supported by India’s natural strengths, the country offers investment opportunities in excess of $500 billion in diverse sectors over the next five years. Despite the likelihood that this figure will not be realised by the target date of 2012, investment in the country has been impressive and confidence has remained high.
As a measure of the faith in the growth of the Indian economy, A T Kearney’s respected Foreign Direct Investment (FDI) Confidence index (2010) places India at number three in the top twenty countries, behind China and the United States.
Expansion in the Indian Economy
Further economic expansion in India is expected in a number of key overarching sectors, including:
- Advanced Engineering
- Retail supply Chain Logistics
- Digital Innovation
- Life Sciences and Healthcare
- Skills and Education
- Infrastructure.
Foreign Direct Investment in the Indian Energy Sector
However investment in India’s energy sector, particularly as the Indian government now sanctions more foreign direct investment, presents a potentially lucrative opportunity for UK companies.
In its Energy Opportunities in India sector briefing UKTI considers some of the impressive statistical evidence associated with India’s burgeoning energy market:
- India is the world’s 5th largest consumer of energy with demand for petroleum products growing by 6% per year.
- In terms of oil and gas India remains one of the least explored regions in the world.
- India ranks sixth in the world in terms of total installed electricity generation capacity.
World Bank Ease of Doing Business Report (2011)
Despite the generally positive outlook for FDI in the Indian Energy Sector, the World Bank Ease of Doing Business Report (2011) injects a cautionary note: India ranks only 134 of 183 countries surveyed.
The World Bank report highlights a number of particular problems in the process of doing business in India:
- Starting a Business
- Dealing with Construction Permits
- Enforcing Contracts.
In a brief comparison with New Zealand, which tops the 2011 index, India has 12 procedures to start a business against New Zealand’s one. India takes 29 days to start a business while New Zealand takes only one.
However, these figures do represent an improvement on the 2006 index and compare favourably with fellow BRIC countries Brazil and China. (BRIC countries are Brazil, Russia, India and China)
Sources:
Investment Commission Government of India, site accessed 29 October 2011
Lucintel, Indian Energy Sector 2011-2020: Economic and Risk Analysis, site accessed 29 October 2011
World Bank, Ease of Doing Business Report – India 2011, site accessed 29 October 2011
UKTI, Energy Opportunities in India, site accessed 29 October 2011
