Prime Minister Manmohan Singh will kick start the India-UK Investment Summit tomorrow. CNBC-TV18 reports on what investors and business leaders there think of the opportunities in both countries.

Infrastructure continues to be the biggest challenge as far as foreign investors are concerned. Prime Minister Manmohan Singh has set a target of $320 billion to bridge the infrastructure deficit. While that figure has heartened foreign investors, they are uncertain about the pace of building that deficit.

Ian Gomes, Senior Partner at KPMG says, "$320 billion is what we need, but the issue is how quickly is it coming and how quickly is it being deployed. I think we are moving at a pace, which we comfortable with in India for example. But to really reap the benefits of FDI, we have got to move at a faster pace."

While FDI inflows may be slow to come in, what about FII inflows? Has the appetite decreased as far as the Indian markets are concerned because of high valuations and uncertainties? Ravi Mattu, MD and global head of equity of Lehman Brothers says, "We see tremendous opportunity especially in the secondary market from the overseas investors. So one can build a business just servicing global hedge funds and global investors based in India."

"The big challenges are to build a local market — whether that is a mutual fund industry or insurance industry or to create financing for infrastructure," he added.

There is a huge interest as far as the India story is concerned. But from a UK point of view, key sectors like financial services, the retail space, as well as legal services continue to be closed to FDI. Until it is more liberalised we will not see a flood of pounds coming in.