Indian industry on Wednesday widely welcomed UK Chancellor Rishi Sunak's Budget, which the Indian-origin minister dubbed as paving the way for an "investment-led recovery" of a pandemic-hit economy.
"FICCI UK Council welcomes the Budget from the Chancellor Rishi Sunak; in the short-term, it will protect the economy and kickstart recovery," said Prashar. (Photo source: Reuters)
Indian industry on Wednesday widely welcomed UK Chancellor Rishi Sunak’s Budget, which the Indian-origin minister dubbed as paving the way for an “investment-led recovery” of a pandemic-hit economy.
Besides the measures put in place to help businesses with grants and loans, the minister’s announcement of consultations related to the visa regime were also hailed as a step in the right direction by both the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII).
“I’m launching two wide-ranging consultations today: to make sure our research and development tax reliefs and our Enterprise Management Incentives are internationally competitive,” Sunak said in his Budget Speech to the House of Commons.
“A new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech. New, improved visa processes for scale-ups and entrepreneurs; and radically simplified bureaucracy for high skilled visa applications,” he said, adding that his mission is to make the UK the “best place in the world for high growth, innovative companies”.
Baroness Usha Prashar, Chairperson of the FICCI UK Council, said the move would help attract talent from countries like India. “FICCI UK Council welcomes the Budget from the Chancellor Rishi Sunak; in the short-term, it will protect the economy and kickstart recovery,” said Prashar.
“The significant announcement of a 700 million pounds support for the UK’s arts, culture, and sporting institutions as they reopen will ensure support to the sector. The launching of a consultation of a ‘new, unsponsored, points-based visa’ to attract international talent in science, research and tech’ is a welcome announcement,” she said.
Among the other highlights for FICCI UK is the announcement of at least 15 billion pounds in green bonds and world’s first sovereign green savings bond for retail investors. And, the creation of the first-ever UK Infrastructure Bank and eight new freeports are seen as having the potential to support trade between India and the UK.
“While the UK still remains the lowest in the G7 countries in terms of Corporation Tax, the hike of Corporation Tax to 25 per cent (from 19 per cent) in 2023 will impact large businesses, including Indian businesses in the UK,” cautioned Prashar.
CII was equally cautious about the proposed tax hike set for high-profit companies in the future, but overall welcomed the incentives put in place for businesses ahead of that.
“While steep hikes in Corporation Tax face businesses from 2023, it is welcome that the government has sought to boost investment through a new super-deduction; this scheme should cover the digital economy as well as plant and machinery,” said Lakshmi Kaul, CII Head and Representative for the UK.
The super-deduction refers to a cut in companies’ tax bill by 25p for every pound they invest in new equipment, meaning they can reduce their taxable profits by 130 per cent of the cost, from April 2021. “It is welcome that the government will continue to support businesses throughout the pandemic, through the furlough scheme and other programmes. This support should enable the UK economy to bounce back when the threat of the virus recedes. Given the extent of the government’s support over the last 12 months, it is understandable that the widening spending gap will need to be plugged in future,” added Kaul.
The Budget, which marks Sunak’s first since the pandemic hit last year, has largely received positive industry reactions for its support initiatives but the Confederation of British Industry (CBI) struck a note of concern for the future.
“This Budget succeeds strongly in protecting the economy now and kickstarting recovery. It leaves open the question of UK competitiveness long term,” said Tony Danker, CBI Director-General.
“The Chancellor has taken a welcome, broad view on how to stimulate growth from the new Infrastructure Bank, to Help to Grow and incentives to take on apprentices. The super-deduction should be a real catalyst for firms to greenlight investment decisions. The boldness of the Chancellor on this measure is to be admired,” he said.”But moving Corporation Tax to 25 per cent in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK,” he added.