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The economic relations between India and UK have been growing strongly post the pandemic. Both the countries see each other as prime trade partners and are signatories to various trade promotion treaties.
Sectors that attracted maximum FDI equity inflows from UK
Data Source: https://dipp.gov.in/
Many UK based multinational corporations have provided thousands of jobs in India for centuries. Over the past few decades, Indian companies have created a very strong market in US and are providing business opportunities all over the country.
Leading UK companies in India
Leading Indian Companies in UK
India’s ranked at 63rd position in 2020. The country’s ranking on the World Bank’s Doing Business Report (DBR) of 190 countries, has improved from 142nd position in 2014 to 63rd position. It has earned a place among the world’s top 10 improvers for the third year in a row.
Trade across Borders: India has simplified starting a business by incorporating electronic memorandum of association and articles of association. India currently ranks as a substantial nation for cross border trade and business investment by the World Bank Cross border trading has now been simplified with the start of post-clearance audits, upgrading port infrastructures, and enhancing the electronic submission of documents.
Custom Clearances: The Central board for excise in customs (CBEC) has simplified Indian customs single window project to facilitate trade. This enables one step submission of custom clear documents on an online portal. Only three mandatory documents are required for customs purposes. Computerized transactions have reduced risks and created a simplified system wherein, chances of inspections have been reduced.
Infrastructure Development: There has been an increase in infrastructure development projects due to reduction in the time and cost of obtaining construction permits. Various municipal corporations in metro cities of India have developed a fast-track approval permit for building projects. Cost of obtaining construction permits has reduced from 23.2% to 5.4% of the economies per capita. These provisions were enabled to ease the process of doing business in India and reaching out to investors around the globe.
Resolving Insolvency: Issues like resolving insolvency have been made easier by promoting reorganization proceedings in practice. As a part of Ease of Doing Business in India, the country has strengthened access to credit by amending its insolvency law. Secured creditors are now given absolute priority over other claims within insolvency proceedings.
As a part of ease of doing business in India, the country has strengthened minority investor protections by increasing the remedies available in cases of prejudicial transactions between interested parties. India made enforcing contracts easier by introducing the National Judicial Data Grid, which makes it possible to generate case measurement reports on local courts.
Paying Taxes: To promote ease of doing business, India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer.
The Employee State Insurance Corporation (ESIC) has developed a fully online return filing with online payment. Due to the introduction of e-verification system, there is no physical touch point for document submission with the income tax authorities.
Business Reform Action Plan (BRAP) 2019 – 372 new action plans were introduced under the BRAP 2019. It included new sectors such as Healthcare and Hospitality, Central Inspection system, Trade License, Registration under Legal Metrology, and Registration of Partnership Firms & Societies. This reform includes the future plans and growth of previous plans by the states and union territories in India.
The Government of India has worked on creating a conducive environment by streamlining the existing regulations and eliminating unnecessary requirements and procedures to help businesses grow. The focus is on reduction in compliance burden by using technology, third party assessments, and faceless human intervention.
The 2030 Roadmap: The governments have adopted a comprehensive policy to enhance trade partnership. The goal under this plan is to double the bilateral trade between India and UK by 2030. The roadmap will cover different sectors like trade, health and people contacts in order to facilitate a mutually stable working environment for both the countries. The two nations came together in the on-going fight against the pandemic to create an enhanced plan for economic growth.
The 2030 Roadmap – Areas of focus
Enhanced Trade Partnership: Under the 2030 roadmap the goal of enhanced trade partnership has been agreed upon. Under this partnership the countries will focus primarily on foreign trade and investment and try to explore every possible field of bilateral trade. This program will lead to creating job opportunities and increase the exchange of skilled human resource.
Joint Economic and Trade Committee (JETCO): JETCO is a forum for UK based companies to enhance Business Corporation in India. Issues of market liberalisation and market access are followed up by JETCO from time to time. JETCO is set under the Roadmap 2030. The two nations recently, in the 14th mutual committee agreed to remove trade barriers. Changes in the trade policy centre around developing factors of trade between the nations and developments are made by time to time meetings.
Online Dispute Resolution (ODR) mechanism: UK court is one of the annexed courts for ODR platforms in India. ODR is often seen to be an online version of ADR. The ODR proceedings with UK center on labour disputes in the two countries. The proceedings use technology tools for efficient group problem solving, decision-making, improving the facilitation of meetings and conducting online surveys.
IP Cooperation MoU: The UK Intellectual property office and the Department of Industrial Policy & Promotion (DIPP) came together to sign a MoU on enhancement of intellectual property cooperation. There is an understanding to increase bilateral cooperation between the two nations.
Focus areas of MoU on IP
Global Innovation Partnership (GIP) : A recently signed MoU on global partnership aims to assist Indian innovations and increase investment in them. This MoU will help in growth of sustainable goals, thereby investing in businesses attached to these agendas. This MoU aims to open an e-market place called the, E-Bazar for cross border innovation transfer and focuses on results based on impact assessment.
Double Taxation Avoidance between India and UK
In 1993 the double tax avoidance agreement (DTAA) was signed between India and UK. The agreement covers tax residents of UK and India. It covers income tax earned by the residents of both the nations. The agreement does not apply to shell companies, the shell companies are mere non-operating bodies with no real or contentious business activity records.
Any UK based company that has a permanent establishment in India; the profit attributable to the permanent establishment will be taxed only in India. And the same process will apply to any Indian company established in UK.
UK is amongst India’s top ten trading partners and the export import rates are ever growing.
The United Kingdom has a wide variety of Indian banks that are available for Indian transactions.
The client’s satisfaction is evident from years of their association with us, more than a decade for a lot of them. We act as an extension of in-house legal teams and act as External Legal Counsel to you. Our efforts are towards being strategic partners in your growth and not to be just a law firm.
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