The CBI and the UK India Business Council (UKIBC) have made a joint submission to the Indian Finance Minister, Arun Jaitley, setting out what British investors would like to see in the upcoming Indian Budget.
As the UK is the largest G20 investor in India – employing 1 in 20 people in the Indian organised private sector – the Indian budget is important to them, and through this submission they have made several important recommendations that will accelerate growth and prosperity in India.
The submission makes clear that UK companies have a positive view of the Indian economy and that they very much welcome the Government’s reforms to date. They also urged the Government to continue these efforts to improve the ease of doing business and to better highlight the investment opportunities. For example, the majority of businesses want to increase investments in India and would be able to do so if there was medium-term clarity on areas of major government expenditure.
The Indian Government’s approach to tax is central to the submission. In addition to asking for a reduction corporate tax, which the Finance Minister signalled in his 2015 budget, UK businesses want to see:
- A smooth and fair implementation of GST. Overall, the benefits of GST are recognised however the submission identifies several issues associated with the introduction of the GST, including the treatment of sectors such as alcohol, petroleum products, and services (insurance, healthcare)
- A simpler, fairer and more predictable tax regime that encourages investment in important sectors. A more certain and equitable tax regime will improve the ease of doing business and will attract more FDI and domestic investment in the Indian economy.
Carolyn Fairbairn, CBI Director-General, said:
“From paving the way for the Goods and Services Tax to continuing to make it easier to do business in India, Prime Minister Modi’s bold economic decisions are sending the right signals to British business.
The UK’s firms are hopeful that the Budget will set the pace for an even more competitive business environment in India, with further protection for foreign investors.
Businesses hope to see a further reduction in corporate tax rates and basic customs duty, as well as clear direction on effective management to raise productivity.”