Ronnie Screwvala, the Bollywood producer, could easily have floated his company in the US. The Indian entrepreneur has close ties to some of the major Hollywood studios, which bankroll many of his creative projects, including Disney, with which he has struck an animation deal.

After some consideration, though, he chose London’s Alternative Investment Market (AIM) as the place to list UTV Motion Pictures. “It was a fine call between AIM and Nasdaq, but in the end we needed to be on the London Stock Exchange,” Mr Screwvala said. “The Government is more supportive in the UK, the talent base in London is good, it’s central for time zones and as a commercial capital it is very strong.”

His geographical inclination is echoed across other Indian industries. “London is the perfect launch pad to get into other European regions,” Ramesh Phillips, the European operations co-ordinator for Wipro, the software group, said. “Everything you need for a successful business is here.”

As Indian companies become global players, one of their first ports of call is the UK. This is because of the historic ties between Britain and India, but also because London is becoming a vital capital-raising centre for their international ambitions.

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London is also benefiting from a “not New York” effect, according to John Ross, the director of economic policy in the Mayor of London’s office. “There are only three places where you can get unlimited access to capital and that’s New York, Tokyo or London,” he said. “Tokyo hasn’t really globalised and when it comes to international finance, London is doing better than New York. London is a one-stop shop for going global and India needs to raise lots of capital.”

Indian companies, mostly property funds, last year raised a record $2.7 billion (£1.3 billion) on AIM and $200 million on the main market. Twenty-four Indian companies are now traded in London; 19 are on AIM.

The journey to London’s capital markets began in 1991 when India liberalised its economy, prompting widespread corporate restructuring, as Alan Rosling, the Tata director in charge of the Indian group’s international strategy, recounts. He said: “For the first time in a generation, Indian companies were free of government restrictions on their overseas investments, they had the competitiveness arising from lower costs of high quality people and they saw the strategic need to scale up to face growing international competition.”

The easing of capital constraints led many, instinctively, to seek a presence in London. “They are coming for a range of strategic motivations – an international profile, acquisitions in Europe or diversifying their portfolio of investments,” Ibukun Adebayo, India specialist at the London Stock Exchange, said. “The fear [in India] that a foreign listing would be a premium capital outflow is being refuted. India realises that the investments flow back in one shape or form.”

As India’s companies look to London, so too do their trusted advisers and financiers. In the throes of independence, the State Bank of India, the country’s largest bank with its origins in the 19th century imperialist Bank of Bengal, ventured abroad on the coat-tails of the diplomatic corps.

Today its private-sector rivals are expanding with the confident strides taken by India’s new ambassadors: the top 2,500 companies collectively sitting on free cashflow of $150 billion and underleveraged balance sheets. “Our customers are going global and we have to follow them,” Chanda Kochhar, the deputy managing director of ICICI Bank, India’s largest commercial bank, said.

In the past five years, the bank has amassed a $6 billion balance sheet in the UK, its most profitable international subsidiary. “I expect to see the operation grow 100 per cent this year and for years to come,” Ms Kochhar said. “Opportunities are arising in India but financial structuring is possible globally. We are bringing the opportunity from India and making it happen in the UK.”

Although it is tiny by global standards, even after a $5 billion secondary issue, ICICI is gradually building an international reputation. It was one of the lead arrangers on Tata’s £271 million acquisition of Tetley Tea in 2000 and a second-tier syndicate lender for the Corus takeover and it structured the finance for the acquisition of Whyte & Mackay by the tycoon Vijay Mallya.

“We have global aspirations – this is an important platform for us,” Sonjoy Chatterjee, the bank’s UK chief executive, said. “Significant growth is to come from international markets and London is the hub. The regulatory environment is extremely benign and it is easy to do business here.”

In the heart of the City sits Punjab National Bank, the third-largest bank in India with 37 million customers and 2,700 branches. Established in 1895, it this year had the confidence to open its first UK branch. Now licensed by the regulator, PNB has ambitions beyond the Indian diaspora to win UK customers by using its cheaper administrative base in India to beat high street banks on their home turf.

PNB illustrates how Indian groups are moving beyond simple cost advantage to rival UK companies at their own game. “India is globalising and our customers are too,” Madanjit Singh, the managing director of PNB’s international arm, said. “Unless we bring in global exposures and best practices, the past is no guarantee of the future.”

In modern times, Britain has ceded its once-dominant trading position in colonial India to more adventurous investors from the US, France and Italy. It would do well to heed the same advice. History offers no guarantee.

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