In recent years, India has improved markedly as a place to do business, rising 79 places in the World Bank’s ‘Ease of Doing Business’ rankings since 2014 (142 in 2014 to 63 in 2020). The country also tops the rankings for ease of doing business in South Asia.
With India aiming to become a $5 trillion economy by 2025, the economy will need to grow by 8% year on year. The UK is a natural partner in helping make this a reality, with both countries having been among the top five investors in each other’s economies since 2010 and trade having increased by 27% between 2015 and 2018.
However, barriers to deepening trade ties remain, from tax and the complexity of regulations to contract and data protection issues. To improve business conditions in India, and make it an even more attractive destination for British firms to invest in, the UK’s largest business group and EY want to see the Indian Government:
- Urgently create a consensus at a national and state level on the next wave of economic reforms required to take India in to the top 50 countries in the World Bank’s ease of doing business rankings
- Prioritise reforms which can be rolled over into other sectors and significantly reduce the burden of compliance and bureaucratic barriers
- Adopt international standards and processes, and ease national ones which hinder trade
- Create a single regulatory authority to support industry
- Review labour laws, reducing obsolete ones and reducing the number of inspections for firms by making greater use of digital technology.
Karan, Lord Bilimoria of Chelsea CBE DL, CBI Vice-President, said:
“As India rockets up the ease of doing business rankings, it is becoming an ever more attractive country in which to trade and invest for British firms.
“Business has warmly welcomed Prime Minister Modi’s bold economic reforms, like the Goods and Services Tax. Now is the time to go further, building on India’s political stability, and reach consensus on new reforms, from adopting international standards to creating a single regulatory authority for industry.
“There’s no doubt that India will continue to be a vital trading partner as the United Kingdom charts a new future outside the European Union. If the Government can make these reforms a reality, the UK will be a natural partner in tackling barriers to trade and working to achieve India’s aim of becoming a $5 trillion economy.”
Adil Zaidi, Partner, Ernst & Young LLP, said:
“Being the fastest growing major economy in the World, at $2.7 trillion, today India stands tall in the global context, aptly targeting to become a $5 trillion economy by 2024-25. To remain on a high growth trajectory on a sustainable basis, a large number of big-ticket reforms have been undertaken by India in the last few years as recently as well. As a result, India is now among the top 10 economies, improving the most on ease of doing business index of the World Bank.
“With this wave of positive change in the country, the trust of foreign investors in India has been constantly increasing, taking the cumulative Foreign Direct Investment to $133 billion since FY16. In this journey, the UK has been one of the largest inward investors in India.
“Through this publication ‘Sterling Access: UK companies supporting India’s growth’, we aim to draw insights on further reforms for doing business in India from the experience of British industries operating in India. This publication will provide insights to the policy makers and help steer the next wave of business reforms in India. As we go ahead, focus should be on sector specific reforms by learning from existing businesses.”
Sterling Access: UK Companies supporting India’s growth will be launched by the British High Commissioner to India, the Hon. Sir Dominic Asquith KCMG.