UK firms upbeat about ease of doing business in India

UK companies are upbeat about the ease of doing business in India, a latest report showed.

A probable Brexit has stimulated more of them to engage more deeply with the south Asian country, the UK India Business Council (UKIBC) said in its 5th annual Doing Business in India Report on Wednesday (13).

Overall, the survey respondents were positive about India with 56 per cent stating that it is getting easier to do business in India, and only 21 per cent responded that it has not improved, while 23 per cent were undecided.

Perhaps, the most positive message in the report for the country’s prime minister Narendra Modi’s government is the dramatic drop in perceptions of corruption.

When the UKIBC published its first Doing Business in India report in 2014, over 50 per cent of the 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 per cent.

There is clearly still work to do to eliminate all forms of corruption, but the continued reduction is a positive, the report opined.

The most persistent barrier to doing business continues to be ‘legal and regulatory impediments’, which were cited by 59 per cent of the respondents as a major barrier.

'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 Indian government to act in this area.

The second most popular reform request was related to the bureaucracy, with 16.9 per cent of the respondents calling for a 'simplification' of the Goods and Services Tax (GST)’.

Nevertheless, it is worth noting that calls for the simplification of GST have reduced from 24 per cent in 2018, reflecting that companies are coming to grips with India’s new tax system.

It also shows that India has improved its implementation since the original rollout.

The highest scoring aspects of the Indian business environment continue to be telecommunication facilities, closely followed by the availability of skilled labour, the availability of support and service providers, and the availability of supply chain.

Maharashtra is making the most improvements on business environment than any other state in India, with 36.67 per cent of the respondents giving it the honour.

Maharashtra is followed by Delhi, which captured 20 per cent of the vote.

With Brexit on the agenda of UK companies, 26 per cent said that they planned to do more business with India as a direct result of the UK leaving the EU.

This will be a further boost to the flow of goods, services and investment between the two countries.

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”.

The report is based on the results of extensive discussions, including a roundtable in London with Indian 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.