UK Businesses, Investors Welcome Indian Union Budget Reforms

The Union Budget presented by Finance Minister Nirmala Sitharaman in the Lok Sabha has generated significant enthusiasm among the UK business and investor community. Key proposals include reducing the Corporate Tax rate for foreign companies from 40% to 35% and abolishing the Angel Tax. These measures are expected to enhance foreign investor sentiment towards India.

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Richard McCallum, CEO of the UK India Business Council (UKIBC), described India as "the most exciting economic story in the world right now." He believes the Budget will help UK firms collaborate more closely with India as a strategic partner. "Corporate Tax reduction is a welcome step for UK companies to come and invest in India," he said.

Positive Economic Indicators

India's fiscal deficit is on a downward trajectory, estimated at 4.9% of GDP for this financial year. The country also recorded an 8.2% growth in the previous financial year. Efforts to create jobs and enhance skills were among other key highlights for UK businesses and industries.

Anuj Chande, Partner and Head of the South Asia Group at Grant Thornton, commented, "Overall, I would say it's a positive Budget for the Indian economy. There have been some really positive measures, particularly on infrastructure and supporting the agricultural economy."

Impact on Cross-Border Investments

Chande also noted that the reduction in Corporate Tax for foreign companies and allowing Indian companies to use rupees for foreign investment will significantly impact cross-border investments between the two countries. "These will have a very specific impact on cross-border investment between the two countries," he added.

For members of the Federation of Indian Chambers of Commerce and Industry (FICCI) UK's India Advisory Group, the Budget was seen as "pragmatic and purposeful" in pursuing a growth agenda. Suchit Punnose, CEO of Red Ribbon Asset Management, highlighted that India's investment in defence, rural development, agriculture, and home affairs would boost jobs and opportunities for foreign portfolio investments (FPI) and foreign direct investments (FDI).

Focus on MSMEs

Nadia Sood of fintech CreditEnable emphasised the importance of measures targeting Micro, Small, and Medium Enterprises (MSMEs). "India’s MSME sector is growing at a CAGR of 2.5%. The move by the government to introduce Mudra Loans to increase the threshold from Rs 10 lakhs to Rs 20 lakhs is excellent," she said.

Sood also praised schemes benefiting women and girls to help upskill them and introduce them into the labour market. She recently collaborated with NITI Aayog on a Digital Credit Readiness Programme for women entrepreneurs.

Encouraging Foreign Capital Inflow

Prem Barthasarathy, Founder and Managing Partner of Pontaq, believes that abolishing the Angel Tax will attract more investors to back innovative companies without worrying about tax implications. "With the Angel Tax gone we’ll see a lot more investors wanting to invest and back innovative companies in the ecosystem," he noted.

The Budget's focus on creating a conducive environment for investment has been well-received by experts. Punnose stated, "We do believe that this Budget brings about the most conducive environment required to invest and now is a very good time to invest in the Indian economy."

McCallum added that UK universities are looking at how to engage with India to address its skilling requirements. He said, "Skills and employability was a clear theme in the Budget...from a UK perspective, UK universities are looking at how to engage with India."

The Union Budget has set a positive tone for future economic collaboration between India and the UK. With favourable measures such as Corporate Tax reduction and support for MSMEs, both countries are poised for enhanced economic ties.