Expectations from India’s Union Budget 2021
On 18 November, the UK India Business Council (UKIBC) in partnership with the Federation of Indian Chambers of Commerce & Industry (FICCI) led a virtual roundtable discussion on the expectations from India’s Union Budget 2021.
UKIBC Group CEO Jayant Krishna moderated the session with key remarks made by Dilip Chenoy, FICCI Secretary General, and Pranav Satya, Chairman of the FICCI Taxation Committee and Partner and National Leader, International Tax and Transaction Services (IITS) at Ernst & Young LLP.
Representatives from UKIBC member companies joined from a range of sectors including financial and professional services; energy, oil and gas; manufacturing; food and drink; and sports and gaming.
Government revenues in India were hit hard due to COVID-19, with GST and corporate tax suffering. Healthcare inadequacy has been exposed and needs to be made a priority. At the same time, regenerating the economy – jobs, spending, investment – is required to recover. Typically, GST is not looked at in the budget, but direct taxes and certain indirect taxes, such as custom duty, are.
Representatives from the financial and professional services sector were keen on the Government bringing back research and development incentives as well as some sort of fiscal stimulus. They also recommended the Government allows reduction as an incentive, which would ease the pressure on banks.
From the manufacturing perspective, participants requested the Government consider an infrastructure development fund. As roads and highways have been the key growth driver in recent years, seeing a bit more stabilisation on the prices of raw materials would be preferential.
One large opportunity for India is the Chinese manufacturing sector falling out of favour with the world market. As the reliability of supply chains is vital for businesses to operate sustainably, now is the time for India to show the world what it can do.
Participants from the energy, oil, and gas sector discussed the importance of a stable regulatory environment for international investors, which further touches on the retrospective tax issue. By accepting the international ruling on retrospective taxation, the Government of India would go a long way to attract further investment.
From the food and drink sector, paperless trade, also referred to as ‘electronically generated trade documentation,’ was a top priority. Digitisation and innovation can be the differentiator in creating a technology driven Atmanirbhar Bharat, or self-reliant India.
Finally, participants from the sports and gaming sector gave their input. Sports betting is already commonplace in India, albeit not legally. To avail of the tax benefits that legislation would provide, legislation was urged not only for the economic benefits but the integrity that doing so would bring to sport.
UKIBC and FICCI will be sharing a joint submission with the Ministry of Finance. The Modi administration’s reform agenda is achieving good momentum, and our submission will acknowledge this. At the same time, we want to set out a series of constructive recommendations that will benefit Indian economy and society, and UK businesses.