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Patricia Hewitt, Chair, UK India Business Council (UKIBC) and former UK minister, says that the Modi government needs to address the retrospective taxation issue to instill confidence in British and global investors. In an interview with Sanjay Jog, Hewitt, who was in the city to inaugurate the UKIBC office, adds that India also needs to rework its labour and environment laws.
What is your view of the initiatives launched by the Modi government to attract investments?
The election of Narendra Modi itself has had a big impact on business sentiment with regards to India. Make in India is a wonderful program to ramp up local manufacturing and to create jobs. Steps to improve the ease of business like reduction in the number of permits is also a welcome sign.
UK can partner India in a number of sectors like advanced manufacturing and engineering, aerospace and defence, education, vocational skills and training. Our companies can also help with the development of smart cities. Besides, there is huge potential to invest in Bollywood, digital effects, heathcare and energy sectors.
The Modi government is yet to decide on retrospective taxation? Is this hampering investments?
Finance Minister Arun Jaitley's statement on retrospective taxation is welcome but much more is needed. We hope that the budget next year will be Modi government's first real budget. Retrospective taxation has damaged individual companies and the government needs to provide complete clarity on the issue. With retrospective taxation still there, India remains a very uncertain market for both Indian and British investors.
What other roadblocks does the govt need to work on?
Retrospective taxation is not the only issue that is hampering investments. Difficulties like the food labelling issue, corruption are also to blame. If India has to achieve its potential and realise the Make in India vision, labour laws need to be reformed. Prime Minister Modi's approach of allowing states to take the lead and decide on labour laws is important for India's development. And while environment laws are essential for sustainable developmnet, it is important to ensure that they don't hamper industry growth and jobs.
What are the policy and regulatory challenges faced by investors in India?
The policy and regulatory uncertainities are big challenges even at the state level. India's future depends on good governance both at the Centre and in the states. While these issues are keeping some investors away, the initiative shown by the government is positive.
I think it is time to look at India afresh, particularly as growth in rest of the world is slowing down. India is a bright spot in the global economy.
