11 November 2020
British business capitalise on ambitious Indian business environment reform plan despite COVID, according to the latest CBI Sterling Access report, which examines trade between the UK & India.
In its second annual edition, Sterling Access 2020 Review, reveals the Indian Government has made significant strides over the last twelve months to improve their business environment at both national and state level. The reforms are part of a national challenge to jump up the World Bank’s Ease of Doing Business Index. Government reforms include passing a key labour reform bill and plans for a new digital ‘one-stop shop’ for firms applying for licences, clearances and incentives given by central government and local states.
The new report shows despite trade disruptions caused by the pandemic British firms from April to June continued to invest around £140 million in India1. Overall, trade between UK and India hit £24 billion till March 2020, up by nearly 12% in just one year. India invested in 120 projects and created 5,429 new jobs – making India now the second largest foreign investor in the UK, just after the US.
While these reforms have been significant, the report recommends several actions the Indian Government could take to go even further including adopting global standards, reducing trade barriers, and making progress on a UK-India free trade agreement.
CBI recommendations to improve the attractiveness of India’s market for British business, include:
- Reduce technical barriers to trade. Adopt international standards and certification to attract foreign investment and position itself as a global exporting hub.
- Formalise the new Joint Economic Trade Committee services working group.
- Enable growth of the Insurance market – raise the FDI limit from existing 49% to at least 74%
- All states and union territories should adopt and complete implementation of labour reforms to encourage international investment.
- Develop new Special Economic Zones to support both manufacturing and services sectors. The case for a new SEZ policy has been strengthened by the Government’s refreshed ‘make in India, for the world’ campaign.
CBI President, Lord Karan Bilimoria, said:
“The Indian Government has hugely stepped up its efforts to improve the business environment this year, from accelerating the use of digital and online services in the supply chain to implementing major labour reforms.
“Building back from the economic shock of COVID-19, Prime minster Modi has made clear his ambition for India to play a bigger role in the global supply chain. In order to accomplish this further progress will need to be made, adoption of global standards, reducing technical barriers and upping the momentum on a UK-India free trade deal will be critical.
“UK-India relations have remained ironclad amidst the crisis with our top universities and businesses collaborating on a covid-19 vaccine and British firms continuing to invest around £140 million across India. As the fifth and sixth largest economies and the world’s leading democracies, UK-India trade deal is a natural fit, that has the potential to bolster our two-way trading relationship across many sectors including life sciences, IT and services.”
Adil Zaidi, Partner, Ernst & Young LLP, said:
“Shaped by the virus, a new and better world order is in the making. This will define the new economic order, relocation, and redeployment of capital across various parts of the world. The pandemic has provided a window to regulators to bring in new regulations, revisit the existing ones and also do away with some of them.
“Second annual edition of this EY-CBI report is special as it also assesses government’s response to our recommendations made last year and the on-ground impact. This year’s edition we have also tried to analyse how National Single Window and implementation of new labour codes will support the ‘Atmanirbhar Bharat Abhiyan’ and improve India’s competitiveness as a preferred investment destination.”