Despite recession, India emerged as the second largest investor in the United Kingdom in 2008, after the United States, according to a new study that sees Mumbai and Bangalore as the next top centres of global investment.
According to the annual survey by accountants Ernst & Young, Indian companies accounted for 49 projects in the UK during the year, which was ahead of traditional investors such as France and Germany. The US accounted for 263 projects.
The survey reveals that London remains Europe's top destination for foreign investment, accounting for 262 of the 686 new projects in the UK. But overall, the year saw foreign investment in London fall by 13 per cent over the last year.
Marc Lhermitte, Partner at Ernst & Young and author of the report said, "The primacy of long-established centres in the developed world, including Europe's capitals, is being challenged by emerging Asian cities such as Shanghai and Bangalore and by regional cities acquiring international expertise."
"When business leaders from our study were asked where the next Google or Microsoft will emerge, Shanghai and Mumbai were seen as the more credible alternatives than New York and Silicon Valley, or London," he added.
Ernst & Young's study analyses both actual inward investment over the last 12 months and attitudes of global investors on their plans over the short to medium terms.
Retaining its ranking as the most attractive European location for foreign direct investment, the UK attracted 686 investment projects in 2008, 4 per cent less than in 2007. The 686 investments created 20, 000 jobs, ranking the UK as the number one location for FDI job creation in Europe.
Lhermitte added, "The BRIC regions (Brazil, Russia, India, China) are not providing the absolutely safe ground international investors are looking for. Europe is seen as predictable and safe."
"Investors are showing greater loyalty to their countries of origin and historical markets, launching fewer projects in Emerging Europe. And that's why, for the moment, at least they'd sooner stay at home than venture abroad."