New Delhi (NVI): Around 56 per cent companies in United Kingdom have shown interest in doing business in India owing to the government’s initiatives of ease of doing business in the country.
Besides the Indian government’s ease of doing business initiative, the drop in perception of “corruption” has also attracted the UK companies to do business in India.
The UK India Business Council (UKIBC) which released its 5th annual Doing Business in India Report on Wednesday also said that 26 percent of UK companies are upbeat about the ease of doing business in India, and a probable Brexit has stimulated more of them to engage more deeply with India.
According to the report, Maharashtra has emerged as the most sought after state in the country with 36.67 per cent of British companies stating that the state is making most improvements on business environment. The national Capital, Delhi, comes next with 20 per cent of votes.
The highest scoring aspects of the Indian business environment continue to be tele-communication facilities, closely followed by the availability of skilled labour, the availability of support and service providers and the availability of supply chain.
UKIBC said, that 56 per cent of UK Companies have stated that it is getting easier to do business in India, and only 21 per cent saying that it has not improved while 23 per cent were indecisive.
The report is based on the results of extensive discussions, including a round table in London with Union Commerce Minister Piyush Goyal, and a survey that captured the views of UK companies and higher education institutions on the operating environment in India and their reform priorities, a statement said.
The report said that perhaps the most positive message in the report for the Modi Government is the dramatic drop in perceptions of corruption. When the UKIBC published its first Doing Business in India report in 2014, over 50 percent of respondents cited corruption as a top barrier to operating in India.
This figure has improved year on year, and in 2019 it dropped to 17.5 percent. There is clearly still work to be done to eliminate all forms of corruption, but the continued reduction is positive, the statement said.
The most persistent barrier to doing business continues to be ‘legal and regulatory impediments’, which were cited by 59 percent of respondents as a major barrier. While ‘Identifying a suitable partner’ and ‘taxation issues’ are the next two most cited barriers.
It is, therefore, no surprise that the most popular reform among UK businesses is ‘improving the quality of bureaucracy, with 28.6 per cent of respondents urging the Government of India to act in this area.
The second most popular reform request was related to the bureaucracy, with 16.9 per cent of respondents calling for a ‘simplification of the Goods and Services Tax (GST)’.
Nevertheless, it is worth mentioning that calls for simplification of GST have reduced from 24 per cent in 2018, reflecting that companies are coming to grips with India’s new tax system, and the country has improved its implementation since the original rollout.
The Government of India announced the reduction of India’s corporate tax rate from 30 percent to 25.17 per cent after cess and surcharges are accounted for prior to the completion of our survey, perhaps one reason as to why India’s previously high corporate tax rate was not mentioned by our respondents, the study said
UKIBC Chief Executive, Richard Heald, OBE, said, “The findings of this report reflect the long-term advantages of the huge and growing Indian market. There have been improvements, particularly in tackling corruption, but there is clearly much still to do to remove the persistent barriers to doing business, particularly when it comes to improving bureaucratic procedures and the application of the tax regime, which is a persistent concern for UK and, indeed, all businesses in India”.
Heald further said, “The UKIBC and our members look forward to our continued dialogue with governments across India, and we remain fully committed to working together to further improve the ease of doing business”.