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26 July, 2006 - 06:24 By Staff Reporter

India now third highest investor in the region

India provided East of England International with its third biggest investment success story in the last 12 months. India provided East of England International with its third biggest investment success story in the last 12 months.

Six Indian companies established a European footprint in the region last year, taking it to third place behind the United States and Japan.

The regional picture was mirrored nationally, with UKTI reporting a similar surge of investment by Indian businesses into Britain, producing the same 1,2,3 – the US and Japan followed by the new rising stars.

James Gray, chief executive of East of England International (EEI), had predicted a year earlier that encouraging more trade links with India could pay handsome dividends for the region.

He says: “For many of us in the UK, China has absorbed a lot of attention in the last couple of years – almost to the point where we ran the risk of taking our eye off India as a marketplace.

“Last year’s investment successes proved we were right to heed the warnings and give India due attention. More so than China, India brought real results for the East of England – our third best performer for investments into the region and now tucked in behind the big two, the US and Japan.

“It is interesting to see the UK Trade & Investment figures reflect the same pattern. India has risen to third in the national rankings almost from nowhere. When you see India outperfoming China from an investment perspective it justifies our strategy to step up our game.”

Gray believes India has worked hard to eradicate perceived trade barriers, particularly through legal reform where concerns over the Intellectual Property regime had been a potential obstacle.

This willingness to open trade ‘frontiers’ has allowed the natural synergies between the countries in areas such as language and business culture to rise to the fore.

Gray says: “There is still a lot of hard work for our businesses to do to make the progress we would like to see in two-way trade with India but the platform is very encouraging.

“From EEI’s perspective, to encourage more of our businesses to look at India as a market place we are adopting a similar strategy to the one we have used in the US and China. We are building strong networks of contacts in India that can pave the way for East of England companies keen to trade with India but not sure how to go about it.”

EEI has forged an alliance with the Confederation of Indian Industry (CII) that has already started to bear fruit. An East of England mission visited India last winter and a return delegation was in this region in June.

Gray said: “There has been a focus on IT – not exclusively but predominantly – so it was fairly easy to persuade our friends to take time in Cambridge as Europe’s technology capital. They demonstrated a real interest in how UK plc, the East of England and Greater Cambridge were able to stimulate growth through IT and maximise the high growth potential of IT businesses for the good of the respective economies.”

The Indian delegation took note of the ‘innovation incubator’ model at St John’s Innovation Centre in Camb-ridge where, under the direction of Walter Herriot, a support structure has created an environment designed to stimulate the growth of small, inventive businesses.

“It is easy to see how the St John’s exemplar could inspire the adoption of a similar model for our Indian colleagues,” said Gray. “We are certainly going to continue that discussion with the CII. It is clear that one of the things we should be doing as a region is to use our leadership in growing businesses to help educate contemporaries overseas in regions where we intend to build strong and lasting relationships. India is one of those key regions for us.”

EEI’s strategy to help act as an educator will be welcomed in India whose objective is to make India “a knowledge superpower by 2020.” This 2020 vision will not be achieved, by the country’s own admission, without imp-roved development and full optimisation of certain skills sets.

A leading thinker on the subject says: “The challenges before us are to enhance the intellectual capital of our country to become a global leader in knowledge-led manufacturing and service industries

“The current pace of economic growth in India is fast outstripping the supply of qualified professionals. This, coupled with globalisation, is raising the competitive bar for companies and is placing new demands on our capacity to meet market requirements.

“The available talent pool is actually smaller than it seems, partly because of skill mismatches, but mainly because sheer numbers do not equal high quality, thereby adversely impacting on our competitiveness.

“While India presently has the advantage of having been rated the first position for availability of scientists and engineers (Source: Global IT Report 2005-06 of the WEF), many of them have poor employability potential.

“Among the major shortcomings are poor communications and inadequate knowledge.

“Wages and salaries in India of skilled manpower are rising fast. India will not be able to take advantage of the demographic profile of its population if the youth do not receive relevant and quality education & training. Industry also suffers, as they are unable to find the required skilled manpower and have to expend huge resources to train and retain employees.”

Gray believes the east of England is ideally placed to help India achieve these aims: “Cambridge and other major centres in the East of England are thriving as knowledge-based economies.

“We want strong relationships with Pune, Mumbai, Hyderabad and so on and help them develop the skills sets we have developed here as a platform to grow their IT businesses. Our Indian allies are also very interested in our investment environment – especially Venture Capital.

“We believe there are advantages to be gained on both sides from brokering relationships between Indian IT companies and our leading venture capitalists. Top VCs also insist on strong management teams and the right skills sets to enable companies with exciting technology to fulfil their potential. So here again there are more synergies with a payback for both countries further down the line.”

Gray senses a sea change in the Indian IT sector that gives its technology companies a much stronger hand in terms of stimulating new trade.

He said: “India has a lot of companies whose executives cut their teeth in terms of management skills in Silicon Valley. These managers have gone back to india to found and run their own companies and are bringing a new maturity and also an international dimension to these businesses.

“Indian software stars have gone way beyond writing code for the benefit of other businesses. They have forged companies that are serious players in their own right – and here again, there is considerable potential for collaboration with like-minded businesses in the East of England”

EEI has partnered with Nasscom, a professional association for the Indian IT industry, to run a couple of seminars in Hyderabad and bangalore in October where East of England companies can showcase their technology.

A reciprocal opportunity for Indian IT businesses to visit this region and demonstrate their capabilities is also being scheduled.

But the opportunities for two-way trade between India and the East of England go much further than IT, says Gray.

“Looking at the Indian companies that have invested in the region so far, the profile spans such sectors as the food industry, healthcare, aerospace, automotive engineering, education and others. Indian companies looking for a springboard into Europe have recognised the East of England as the ideal platform.

“Stansted has declared its intention to open up India for business and domestic travel. A major rice importer, Indo European Foods, is bringing goods in significant volume through Felixstowe port. This is why the Indian opportunity is so exciting for the region – the pure diversity of industries we are seeing is so exciting.”

EEI will work alongside ERBI, the region’s biotech facilitator, to encourage more Indian pharmaceutical and biotech businesses to follow Nestor’s example in setting up base and expanding in the region.

It also sees potential in linking Indian researchers with centres of excellence such as Norwich Research Park. Commercialising raw research is an issue for India at present and the East of England has already been through the pain barrier in this regard.

Gray is convinced that there are similar opportunities in the fast growing food sector. “There is huge demand for Indian ethnic foods – not just from Indian people living in the UK but also from the broader population.”

EEI will be taking representatives of business and academia to another Indian showcase in December and the party will include the University of Hertfordshire.

Gray said: “The University has specialisms in areas such as biotechnology, animation and film & media where there are obvious synergies, but we also think there is merit in matching various of the University’s faculty with contemporaries in India.

“The Confederation of Indian Industry has helped fashion what is almost an Ivy League-type network among Indian institutions of technology and we think the University of Hertfordshire matches their footprint in many regards. All the events we are getting involved in will help us achieve that priceless objective of getting the door open for new business.”

East of England Intern-ational has another ace in its pack – its dedicated Silicon Valley office based in San Jose.

San Jose is twinned with Pune, the western Indian city that has a global reputation for high-quality educational institutions and is home to a cluster of software and general IT companies.

Gray said: “San Jose has already opened doors in Pune and we will be working to leverage those relationships.”

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