Thoughts on India’s Budget and the second UK India Business Centre

Two events have largely defined the last month for the UK India Business Council. Firstly India's first Union budget since Narendra Modi was elected Prime Minister. Secondly, the first clients moving into our second UK India Business Centre, which is located in Bangalore. Both mark transitions, which I believe will allow, and encourage, more UK business to enter the Indian market

For India, however, the topic of conversation in July has focused largely on one key event, the Monsoon, or to be more accurate the lack of one. With agriculture accounting for nearly 14 percent of the country’s economy, the failure of India’s annual Monsoon is source of much worry for Indians, especially the two-thirds of the population living in rural areas, where the impact could be catastrophic.

As a result, even now Monsoon watchers are anxiously looking to August, even as the latter half of July has seen the arrival of strong rains in central India and parts of the northwest. Hopefully the Monsoon will arrive in full force this August.

Thoughts on the Union Budget

The election of Narendra Modi in May produced a seismic event which overturned many of the accepted tenets of Indian politics. As a result expectations of the first budget in many quarters were sky high. However, as Patricia Hewitt, Chair, UKIBC argued in a Telegraph article at the time “continuity will be as important as change…Like any new prime minister, Mr Modi will no doubt emphasise the change. But the reality is that we will build on and accelerate the previous government’s efforts.”

In line with this the budget announced on the 10th July did not include any ground shaking proposals or announcements on thorny issues and it did not significantly deviate from what Congress were doing or would have done had they won.

What it did do is mark out the direction and tone of what a Modi government plans to do over the next five years, and how it will go about it.

Here are a few highlights that the UK India Business Council sees as incremental, but positive, steps aimed at improving India’s economic outlook and investment environment.

• No new Retrospective Tax to be issued; however current cases to be scrutinised by CBDT for resolution (high level committee to be set up)
• Investor friendly Tax regime; India will bring in Goods and Service Tax by the end of the year
• FDI in defence to be allowed up to 49% with full management control for India; FDI in insurance to be allowed up to 49%; as well as steps to open FDI in urban construction sector
• E-commerce sales allowed in the retail sector
• Development of smart cities – 100 (Rs. 7060 cr allocated so far)
• Bold steps to tackle Tax administration – state co-operation will be sought reinforcing the perception that India’s States are increasingly key to India’s attractions as an investment destination
• Higher Education focus – 4 news AIIMS proposed in Andhra Pradesh, Maharashtra, West Bengal and Uttar Pradesh (Rs. 500 crore allocated for the same) ; AIIMS in every state of the country going on; 5 more IITs (Rs. 500 cr for this)
• Skill India Plan to boost companies with vocational training.

All welcome moves, in particular those around FDI in defence and insurance, however, as the new government settles in we anticipate more concrete steps over the coming year, and potentially we will be sighted with more details around investment, tax and regulation policy during the Prime Ministers speech on August the 15th. We shall of course keep you posted.

UK India Business Centre Bangalore

The opening of our Bangalore Centre was attended by Ian Felton, British Deputy High Commissioner, an array of leading UK and Indian business figures, and was broadcast live to delegates attending the India Day at the International Festival of Business in Liverpool.

Our entry into Bangalore gives UK companies a unique market entry platform – advice, knowledge, networks, influence and office and event space. This expansion of our presence into southern India is coupled to a growing pool of UKIBC expertise and support in the UK, and to a growing network of UKIBC clients and members benefiting from our support and policy advocacy. The attached brochure illustrates the highlights of what is on offer, and some of the businesses with whom we are working. You can also view images of the Bangalore Business Centre here

At 12,600 square feet, the Bangalore Centre will be our largest. We are delighted that there are already signed-in clients, including British Airways, ADS, and CDC. We are also excited to be the base for TechHub, the community and workspace for tech entrepreneurs, which is using the UKIBC centre to establish its entry into India. For more information on our new centre contact our new Bangalore Director Arun.Narayan@ukibc.com

Upcoming Delegations to India

We currently have a number outbound delegations to India that I’d like to draw your attention to. Firstly, we have our annual Skills Delegation which this year will be visiting New Delhi and the FICCI Global Skills Summit from the 31st August to the 5th of September. The focus of the delegation will be on understanding the training requirements of employers in India, and meeting with Indian training providers who represent a key source of potential partners in the market and an invaluable chance to get to grips with the opportunities in India’s education sector. Click here for more information

Secondly, from the 6th-12th October we are taking a cross sector business delegation to Bangalore, New Delhi and the Great Britain India Business Convention. Our programme will begin in one of India’s major economic hubs and the gateway to the south of India, Bangalore, where he have recently opened our second UK India Business Centre. The week’s activities will then move on to the northern economic and political capital Delhi where the UKIBC will be running a Doing Business in India zone at the British Business Groups’s Connect ’14 Convention. The Convention is expecting over 500 British and Indian corporates who are keen to do business and forge partnerships in India. Click here for more information

Issue six – UKIBC Business Exchange: Election Special

Lastly, I hope you have had a chance to read the latest issue of UKIBC Business Exchange. Given the unprecedented interest in the Indian election from UK corporates, the latest issue breaks with our usual focus on India’s business friendly states, and instead looks at the election results and asks what they mean for UK businesses. We carry a number of insightful and interesting articles from a range of India experts, which you can read here.