60% of UK businesses have increased investments in India since Modi came to power
By UK India Business Council (UKIBC)
A market stall in Ahmedabad - one of Modi's 20 proposed 'smart cities.'
Around 60 per cent of UK businesses have claimed that new policy measures announced by Prime Minister Modi since taking office have encouraged them to increase investments in India, according to a report published by the UK India Business Council.
Two years on from Modi’s historic election victory, the UK India Business Council surveyed its members to gain a deeper understanding into the impact of Modi’s economic reforms through a range of discussions held at seminars, roundtables, webinars and interactions with senior government and business figures.
The increases in investment highlighted in the UK India Business Council report mirror India’s recent GDP figures, which were positive – showing growth by 0.4 per cent, from 7.2 per cent in 2014/15 to 7.6 per cent in 2015/16.
Coupled with a commitment of £2 billion from UK businesses to India over the next five years, and new peaks in Foreign Direct Investment (FDI) and foreign exchange reserves, this will make good reading for Modi, who has made no secret of his desire to make India a global manufacturing and exports hub.
The report also revealed UK India Business Council members are encouraged by Modi’s FDI reforms and initiatives, such as ‘Make In India’ and ‘Smart Cities.’ These were shown to be the most impactful for UK businesses operating in India, who seem to be relishing the new opportunities available to them since Modi came to power.
Challenges remain however, with more work still to be done for Modi’s government on bureaucratic efficiency at grassroots level, with 54 per cent of respondents claiming that reforms were yet to percolate down to the lower levels of bureaucracy.
Other key findings from the UK India Business Council report found that:
- ‘Resolving tax disputes’ remains a challenge for 29 per cent of respondents – indicating the ongoing Cairn India and Vodafone cases continue to have negative impact on the perceptions of India as a good place to invest.
- The Administration received an overall score of 7/10 from respondents – also the score given by the Associated Chambers of Commerce and Industry of India who described the Modi Government as a ‘work in progress.’
Richard Heald, CEO of the UK India Business Council, commented: “Data gathered from the public and private sector indicates that the NDA Government agenda is having an overall positive effect. An analysis of 12 key macroeconomic indicators show India has been on a better footing since 2014 – its GDP has risen to 7.6 per cent, inflation is almost half, and its budget deficit has shrunk to 3.9 per cent of GDP from 4.4 per cent.”
On the work still to be done, he added: “In considering the performance of the Government, it is important to keep in mind the political arithmetic. While Modi won a majority in the Lower House, the Government inherited a minority in the Upper House. As the Upper House has strong powers, this is the chamber in which the opposition parties are blocking important legislation.”
The full UK India Business Council Modi Government Progress Report can be downloaded here.
