Quite a few UK-India investment and business deals have been announced in recent months in areas like aerospace, automotives, energy and sustainable manufacturing. UK businesses involved in these areas and participating in global supply chains should look out or potential opportunities arising in these areas.

Mahindra's deal with Rolls Royce an outstanding example of UK-India collaboration

In August, one of India's largest business houses, the Mahindra Group, entered into an agreement to source engines for Rolls Royce’s new GA10 aircraft and to develop further engine technology going forward. The GA10 is a new 10-passenger aircraft currently in the prototype design phase. It is being developed by GippsAERO, a wholly owned subsidiary of Mahindra Aerospace, at its Morwell facility in Australia. Rolls Royce will be supplying its M250-B17F/2 turboprop engines and will be working together with Mahindra Aerospace to obtain certification for the new aircraft.

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India successfully hosts its first Formula One

India has joined the elite league of countries to host the largest international motorsport event. The event was held at the new Buddh International Circuit in Noida (near Delhi), which is touted as one of the fastest F1 tracks. The inaugural Indian Grand Prix went very smoothly and was viewed by over 25 million people in India alone, an amazing figure for a sport that is relatively new to the country.   

It is worth highlighting the UK’s contribution to F1. Successive generations have produced champion drivers, from Mike Hawthorn in 1958 to Jensen Button in 2009. Bernie Ecclestone has brought F1 to the TV screens of millions through his entrepreneurial skill. And it is British technological innovation that has repeatedly revolutionised Formula One,” said the British High Commissioner to India.

In his statement he added: “Every part of an F1 car has some input from the UK, whether in the design, the assembly or the manufacture. The UK is home to 4,500 firms (with an annual turnover of £6 billion) and 38,500 employees (including 25,000 world-class engineers) contributing in one way or another to F1's technological excellence. British engineers have kept Cosworth at the cutting edge of F1 engine design for the best part of half a century. And the UK is proud that 8 out of the 12 F1 teams, including Sahara Force India, have their base in the UK.”

We feel that with this inaugural event being a success, we will see a lot more collaboration between the UK and India in this area.

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Rio Tinto plans major investment in Eastern India iron mines

Rio Tinto is in the process of finalising an agreement with the eastern Indian state of Odisha to develop and mine three iron ore deposits in Keonjhar district. The projects will be carried out through a joint venture with the Anglo-Australian mining giant holding the majority (51%) stake while state owned companies Orissa Mining Corporation and National Minerals Development Corporation will hold 44% and 5% respectively in the venture. The joint venture plans to invest around $2 billion over the next few years to develop the mines.

If the agreement goes through, this would be one of the largest investments in the Indian mining sector. Rio Tinto will bring in its expertise in exploration, sustainable mining and beneficiation practices to the project. “We are looking at a scale of between 5 million to 25 million tonnes per annum in the long term,” Dr Senapati, Managing Director, Rio Tinto India.

Once this deal goes through, there will be significant opportunities for mining equipment providers and operating/services companies in the UK to provide specialised equipment and share global mining expertise. UK firms are already very strongly entrenched in the coal mining equipment supply market in India. British firms are also engaged in a significant way in the upstream petroleum sector.

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Tata Steel to invest £ 4.5 million in its UK operations

In addition to its £20 million investment last year, Tata Steel is planning to invest an additional £4.5 million in its South Yorkshire operations. These investments are for improving plant reliability and energy efficiency, reducing CO2 emissions and boosting production of high-value steel products. These would lead to savings of around £850,000 annually. According to a statement, “the amount of energy saved – 19,000 mega watt hours (MWh) – would power 4,000 homes.”

Tata Steel has also recently invested £2 million in upgrading its hot rolled steel processing facility at its plant in Dudley.

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JLR setting up an engine plant in the West Midlands – will create 750 jobs

Separately, another Tata Group company, the luxury carmaker, Jaguar Land Rover, has announced an investment   of £355 million to build low-emission engines on a 120-hectare site at a business park near Wolverhampton.

JLR chief executive Dr Ralf Speth said it was "truly exciting news" and "a major commitment for our company". He added, “We expect the engine manufacturing facility to create up to 750 highly-skilled engineering and manufacturing posts at Jaguar Land Rover, along with hundreds more highly-skilled manufacturing jobs in the supply chain and the wider UK economy”.

JLR plans to invest £1.5 billion a year for the next five years in new product developments, expanding their engine range. The UK Government welcomed the announcement saying that this underlines the strength of the British economy and would help boost inward investor confidence.  

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BG keen to buy stake in ONGC's eastern offshore block

The UK is already the largest investor in the petroleum sector in India, with majors like BP and the BG group firmly entrenched in the market, clearly much ahead of international competitors. This is due to historical ties, a better understanding of Indian geology, and a demand-supply compatibility, especially in technology.

The BG Group is already a major player in the Indian oil and gas sector, with significant investments in both the upstream and downstream segments, and it is keen to enhance its presence.

According to a report in the Economic Times, the company is in discussions with ONGC to pick up a stake and partner in exploring a block adjacent to Reliance's KG D-6 block (which is India's biggest natural gas discovery to date) in the offshore Krishna Godavari basin in the Bay of Bengal.

Other than exploration contracts BG has won through the licensing rounds, it has been partnering (and also entering into farm-in agreements) with ONGC in exploring some of its existing exploration blocks. ONGC has been firming plans to invest $7.7 billion to develop its fields which have estimated gas reserves of 3.42 trillion cubic feet. BG's international deep water exploration experience will be a great help to ONGC if this proposal goes through. Cairn Energy is already a 10% partner in the block.

India remains attractive more widely, as seen by BP's recent investment of $7.2 billion to acquire 30% in of Reliance Industries’ oil and gas blocks. Vedanta's stake in Cairn India was also a very noteworthy $9 billion.

We feel that with the significant involvement of UK players in India, there will be considerable scope for their supply chains, services companies and equipment providers to work alongside these majors in India. As India moves into deeper-water exploration and explores opportunities to increase output from depleting oil and gas field, there will be substantial opportunities for technology collaboration and sharing of good practices.