Hyderabad:  The UK India Business Council (UKIBC) has released its 5^th annual Doing Business in India Report. The report is based on the results of extensive discussions, including a roundtable in London with Commerce Minister 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.

Dr. Andrew Fleming, British Deputy High Commissioner to Telangana and Andhra Pradesh participated in the round table and said “It is great for our visitors to get a direct sense of the strong commitment the Telangana State Government have to improving the ease of doing business. The Telugu region has been the number one region of the country in terms of EODB since I arrived in 2017, something people are justifiably proud of. .”

For the first time, the UKIBC canvassed views on how India’s States and Union Territories are performing on the ease of doing business. When asked “which states are making the most improvements on business environment?”, Telangana, being in the top five preferred destinations for UK businesses, is a display of immense work and steps taken by the Government of Telangana towards creating a business conducive environment. One of the example is the single-stop clearance facility that ensures swift clearances to set up industries based on self-certification by the entrepreneurs.

On presenting the report to Jayesh Ranjan, Principal Secretary – Industries & Commerce, Govt. of Telangana, by UKIBC Managing Director, Kevin McCole, Kevin had following to say, “it is no surprise that UK businesses have recognised that Telangana to be in top-five States in improving the ease of doing business, or that it is the preferred investment destination for UK corporates, across all sectors. The way the State Government has engaged with UK investors over the last few years has been impressive, particularly because the focus has been on solving ease of doing business issues.”

On being asked about the UKIBC EODB 2019 report, Jayesh Ranjan, Principal Secretary, Industries & Commerce, Govt. of Telangana had the following to say, “A very insightful report based on the perceptions of the UK companies present in India. Telangana though has a positive ranking, it is not the number one State of preference yet for UK businesses. We value the feedback and would try to understand the exact areas of challenges and struggles, and keen to bring in reforms to support UK businesses in Telangana.”

The British Deputy High Commissioner Hyderabad, Andrew Flemming, on being asked about the delegation visit, said “This is the second delegation of Universities we are welcoming in 2 months and I am delighted to receive them. There is a growing desire among British institutions to forge mutually beneficial collaboration both their Indian counterparts and with industry. In a dynamic city like Hyderabad which has a global reputation for innovation the possibilities are endless; I am confident introductions made by this visit will lead to some truly exciting outcomes.”

 

Highlights from the report:

Overall, the survey respondents were positive about India, with 56% stating that it is getting easier to do business in India, and only 21% saying that it has not improved.

Perhaps the most positive message in the report for Mr. 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% of 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%. There is clearly still work to do to eliminate all forms of corruption, but the continued reduction is a positive.

The most persistent barrier to doing business continues to be ‘legal and regulatory impediments’, which were cited by 59% of 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 percent of respondents urging the Government of India to act in this area.

The second most popular reform request was related to the bureaucracy, with 16.9% of 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 percent in 2018, reflecting that companies are coming to grips with India’s new tax system, and India has improved its implementation since the original rollout.

The Government of India announced the reduction of India’s corporate tax rate (from 30% to 25.17% after cess and surcharges are accounted for) prior to the completion of our survey, perhaps one reason as to why India’s previously high corporate tax rate was not mentioned by our respondents.

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

With Brexit on the agenda of UK companies, 26 percent 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.