Indian businesses are now spending more on buying businesses in Britain than in any other country, said business adviser Grant Thornton. Britain tops the list of destination for offshore acquisitions by Indian companies, according to its newly launched India Watch research, which monitors the India-Britain business relationship through both cross-border M&A trends and the performance of Indian companies on the London Stock Exchange.

The sale of Jaguar and Rover to Tata Motors helped to boost the total value of Indian acquisitions to £1.52 billion in the first half of the year, compared with £930 million in the US and £561 million pounds in the Netherlands. The US, however remains the number one destination by number of companies acquired, with 41 American businesses purchased by Indian companies in the first half of 2008, compared with 20 British companies.

At the other end of the scale from the Tata deals is the purchase of stockbroker Hichens Harrison & Co. Plc. by India's Religare Capital Markets Ltd. for £50 million, demonstrating the diversity of British firms now targeted by Indian interests. Anuj Chande, head of Grant Thornton's South Asia Group, said the interest was due to a combination of historical ties, strong cross border business links and infrastructure, a very compatible business ethos and the fact that many British firms' values have fallen.

On the other hand, Indian firms are flush with cash after a period of rapid economic growth, and are buying more foreign companies than ever. In 1998 there were a total of 15 companies purchased offshore by Indian companies; in the first six months of this year there have already been 161 acquisitions.

"Indian businesses are looking primarily looking to buy brands and established distribution networks. If a UK brand with an international profile is looking for buyers, expect interest from acquisitive India companies. This is a nation forging ahead with buy-and-build on a massive scale," said Chande, who worked on the Tata deal.

UK companies were also on the acquisition trail in India in the first part of 2008, with £487 million spent on 23 companies - although this is significantly down on last year's record breaking £9.56 billion in total British acquisitions in India. Deals included the acquisition of IL&FS Investsmart Ltd, a financial management firm, by HSBC Holdings Ltd for £123 million and Thomas Cook UK Ltd acquiring a majority shareholding in Thomas Cook (India) Ltd for £116 million.

"Not only is the Indian economy racing but business infrastructure in India is catching up with this growth, with the depth of skills contained within the workforce as a whole continuing to attract foreign investment from around the globe," Chande said. "The opportunities for UK companies are huge, but unless decision making is well-informed, India still holds many more M&A pitfalls than traditional markets such as Europe and the US," he added.