UK businesses 'encouraged' by Budget focus on growth, trust-based approach

The Union Budget tabled by Finance Minister Nirmala Sitharaman in the Lok Sabha on Saturday has been received with much enthusiasm within the UK business and investor community, with the focus on economic growth, boosting private investment and a trust-based economic governance approach being highlighted among some of the stand-out proposals.

In what marked Sitharaman's eighth consecutive Union Budget, the minister announced key allocations and policy measures across crucial sectors. Richard McCallum, CEO of UK India Business Council (UKIBC), highlighted a focus on simplifying conditionalities associated with foreign direct investment (FDI), skilling and policy reforms among some early takeaways.

I'm encouraged by the focus on economic growth, on invigorating private investment [because] we do need more private investment for growth to be sustainable, on skilling and stimulating more consumer spending. We also welcome the focus on domains like tax administration and policy reform, urban development, energy security and other regulatory reforms, McCallum told PTI.

The chief of the policy advocacy body promoting growth in India-UK trade and investment welcomed movement on customs streamlining, which would benefit the ongoing Free Trade Agreement (FTA) negotiations and strongly endorsed reforms on simplifying inspections and certifications, especially at the state level, and also a push towards competitive federalism.

More broadly, I noted that the finance minister talked about simplifying conditions linked to FDI. We have been long advocating for a simplification of conditionalities associated with foreign investment, there will be more FDI if foreign companies can optimally leverage the FDI caps that are in place, said McCallum.

I think there are other things about the Budget that I am optimistic about from a UK-India perspective. So, for example, in ease of doing business terms, the announcement about refreshing the model BIT [Bilateral Investment Treaty] we would argue that needs to be rooted in investor protection, but I think that is a welcome step to encourage more FDI; also the high-level committee on regulatory reforms being set up, he said.

I also was very encouraged by the move towards a trust-based economic governance approach. I think that's a really positive step. The vast majority of businesses and institutions and individuals are voluntarily compliant, and this sends a really positive message to investors about India, he added.

The CEO of UK-headquartered India Global Forum (IGF), which helps navigate businesses worldwide through their India growth and investment strategies, said the Budget offered a lot to unpack for global investors with its manufacturing and infrastructure focus and welcomed the foreign direct investment (FDI) cap hike in the insurance sector as big news.

The FDI limit in insurance is now 100 per cent, as long as companies reinvest the full premium in India. This is a major boost for global players looking to expand, said IGF Founder Manoj Ladwa.

The promised transformative tax reforms aim to streamline the system and make India an even more attractive place to do business. With enhanced credit guarantees to help SMEs [small and medium enterprises] grow, generating jobs and opening up new investment and partnership possibilities, it's clear that India is doubling down on growth, investment, and long-term stability, he said.