How India is Buying the United Kingdom's Largest Companies

Indian companies are increasingly becoming global players, acquiring companies left and right. One of the largest strategic destinations for Indian companies is none other than the United Kingdom. The two countries share a distinct history with one another, one that is built on controversies but also trade, investments, and business cooperation. What led Indian companies to invest in the United Kingdom is not merely due to geopolitics but also because the UK stands as one of the most important financial powerhouses in the entire world, coupled with its technological advancement and robust market. But the most perplexing question about these is actually about India. India is still a developing economy, with an economic size of about 3.3  trillion dollars.

While it is above the United Kingdom at 3 trillion dollars, India is still by no means a financial powerhouse. Its investments, which at times range to over a billion dollars, should then imply a deeper meaning. If Indian companies can invest in overseas companies worth this much, does it then imply that there is more opportunity in the United Kingdom than in India’s domestic market? Arguably one of the world’s fastest-growing destinations? 

Well, it is quite complicated, to say the least. But to understand why India is investing so much in the United Kingdom, we must first understand what companies Indian businesses are buying. To start off, one of India’s largest and most famous companies is Reliance Industries.

Reliance is a company worth nearly $200 billion and has revenues of more than $100 billion. Their reach, therefore, is significant. And in the United Kingdom, they are one of the most significant foreign investors. In 2021, they made a 100 million-pound acquisition of Faradion Limited. Faradion is one of the leading global battery technology companies. In 2019, Reliance also acquired the British toy maker Hamleys. Hamleys, at the time of the acquisition, owned 167 stores across 18 countries.

In India, Reliance has the master franchise for Hamleys and presently operates 88 stores across 29 cities. Reliance Industries also acquired the iconic British hotel Stoke Park in 2021 for 57 million pounds. Beyond Reliance Industries, there is also Tata Group. The Tata Group has long been a buyer of British goods. Back in 2000, they acquired the giant British tea company Tetley. The deal, which was only worth 407 million dollars at the time, helped Tata become a global tea company. Tata Motors also acquired the iconic Jaguar and Land Rover from Ford Motors. Although it was owned by a US company, these two are still headquartered in the UK and their history belongs to that country.

On top of these blockbuster deals, Tata Group recently announced in mid-2023 that it was investing a whopping 4 billion euros in a UK gigafactory. The project will secure UK-produced batteries for Jaguar Land Rover as well as other manufacturers in the UK and Europe. The gigafactory stands at over 40 gigawatts, one of Europe’s largest, and will produce a whopping 4,000 employees. In the IT field, we also have WiPro and Infosys. WiPro once made a 1.45 billion-dollar deal to acquire Capco, a London-headquartered consultancy firm. Infosys, on the other hand, had acquired a small company known as Brilliant Basics in 2017.

Tata Chemicals has also been an active investor. It acquired Cheshire Salt Holdings, the parent company of British Salt. Another less talked-about investment is the acquisition of a 40 percent stake in OakNorth Bank, which eventually sold some of its stake in later years. These are just some of the many more acquisitions out there. But these are enough to prove that Indian companies are indeed buying millions to hundreds of millions of billion-dollar companies in the United Kingdom, which was once India's colonial ruler. As a matter of fact, many observers and even government officials from the UK stated that the UK is a beneficiary of reverse colonialism. This comes to show the massive growth of Indian businessmen and corporations in the United Kingdom. Collectively, it is reported that as of 2021,  India had emerged as the second largest source of foreign direct investment for the UK.

Investing in 99 projects and creating 4,830 jobs. Separate data reported by InvestIndia showed that India is the 2nd largest FDI contributor in the UK. Over 954 Indian companies employing 105,931 people operate in the UK, with combined revenues of 65 billion dollars, up from 900 companies in 2022. Now if these are not enough to tell you that India is indeed a big player in the UK, then one should look at the many British billionaires of Indian origin. One of the most famous belongs to the Hinduja family. It is known that the Hinduja family has a net worth of tens of billions of dollars.

They originated from British India, but most of its families, especially its head, had lived in London. Lakshmi Mittal and family likewise reside in the United Kingdom. These and many more Indian billionaires are choosing to live in the UK. But it is also important to know that the UK is also a big investor in India. According to InvestIndia, the UK is the 6th largest investor in India and has invested 34.3 billion dollars in FDI inflows between April 2000 and June 2023.

There are currently 618 UK companies in India with a combined turnover of $45.6 billion, employing about 466,640 people directly as of 2022. Now, finally, let's discuss another key feat of these investments: the impact. The economic impacts of these acquisitions,  and particularly what they mean for India, First, let's talk about job creation. When a large Indian company invests abroad, it often leads to job creation back home.  How? By acquiring a foreign company, an Indian firm can gain access to new technologies and markets, allowing it to expand its operations, which may require additional manpower, thereby creating jobs.

Next, there's the issue of technology transfer.  For example, by acquiring Jaguar Land Rover, the Tata Group taps into advanced automotive technology. This technology can then be brought to India, paving the way for advancements in the automotive industry, a sector India is keen on developing. Another crucial impact is the strengthening of trade relations between India and the UK.

As Indian companies invest in the UK, they bring in revenue, which contributes to a favorable trade balance. Over time, this helps in negotiating better trade terms, benefiting both countries. Finally, the most important aspect of an investment is that it generates money. When Indian businesses buy overseas companies, it is not for publicity but for making overseas money, in dollars, euros, or pounds. These can then translate into many things. They can use these new dollars to buy more companies overseas, or they can bring them back to their home country, presenting another form of capital. For instance,  Jaguar and Land Rover reported in Q4 2023 over 7.1 billion pounds in revenue and gained profit before tax, while others reported over 368 million pounds.

This money does not go anywhere but either back to the company, paid in dividends to its owners, such as Tata Motors, or may even be used to funnel investments in India. But it's not all roses. There's a flip side to this trend. When Indian companies acquire firms abroad, they might shift their focus away from the domestic market, especially if the overseas market offers better profit margins. This could lead to reduced investment in India, which could be a concern. But it brings the big question to light. India is the world’s most promising developing country. 

It is growing in high single digits every single year. Whereas, the UK has long been known to be a developed country, with population and economic growth in the low digits. So how could these Indian businesses justify their investments in the UK? Well, this is arguably a question of geopolitics. However, as we mentioned earlier, one must also look at the technological transfers that can be in play. In the end, whatever happens, these are all still good economic impacts.

These acquisitions can be seen as steps towards turning India into a global powerhouse. These acquisitions, after all, are not limited to the UK but are seen all across the world. But anyway, do let us know what you think.

Thanks for reading!