What stops UK from investing more in India

Foreign direct investment restrictions in financial services, insurance, banking and retail are impeding the volume of capital invested in India by British companies, British High Commissioner Sir Michael Arthur said on Friday.

"One of the constraints on British companies has been that there are certain limitations in certain sectors where we are strong, like financial services, insurance and banking, which impede the volume of capital that we would like to invest," he said.

Arthur, however, hastened to add: "That's beginning to change. "Britain is encouraged in a way by liberalisation in India. We are enthusiastic about the Indian economy and we would like to be here more than we are (at present)."

He said big players from Britain are also showing interest in the retail sector in India, where "unlimited FDI is not allowed", he said.  He expressed hope that India would allow FDI in retail. "I am confident it will come, it's a question of how soon," he said.

Arthur said Indian investment in Britain in 2005 was more than £1 billion, which is "quite a lot more than British investment into India".

The reason for comparatively lower British investment is the "limitations" on FDI. Sounding an optimistic note, he said India is now the third largest investor in Britain in terms of projects.

"If current trends continue, India will soon be the largest investor in Britain," said Arthur, who was in Bangalore to attend Bangalore IT.in exposition as the guest of honour.