Taking part in UKIERI Programme was an exciting and insightful experience for me. During the three weeks of the programme I visited the most spectacular places of historical and cultural significance in Delhi and Mumbai, the two metropolitan cities which play a major role in the Indian politics and its rapidly growing economy. Fellow participant students and I also met a number of prominent people from India and those from abroad who embarked upon India and found home there. It was fascinating to learn about their experiences in India from and their views on the issues surrounding India.
We spent most part of our time in Delhi where in addition to visiting places and attending lectures and workshops I also gained work experience while doing internship in the UK India Business Council (UKIBC), the UK organisation helping British businesses to operate and/or establish businesses within India. While doing my research for UKIBC I discovered many interesting facts on business and investment opportunities in India finding the answer to my big question why more and more international UK companies want to increase their presence in the Indian market. It appears that the main reason is the cost effectiveness of services and manufacturing due to the low cost human resources (as a result of the grown Indian population), which mostly comprises of young potentially employable people under the age of 24.
To address and satisfy the needs of densely populated India, the government has introduced numerous measures aiming at drawing investments into India both internally and from overseas. One of these government’s initiatives is the programme of Foreign Direct Investments (FDI) which mainly concentrates on development of the Indian infrastructure to boost economic growth. I researched the investment opportunities in India’s Defence and Aerospace sector, which have been given high priority by the Indian government as it follows from media and experts’ comments and reports. Even though the share of foreign investments in Indian Defence sector has been limited by the current FDI Regulations to 27 per cent there are a lot of business opportunities in India for the British Air Defence manufacturers especially now that India has diverted its attention from Russia for strategic partnership in defence sector and actively looks for cooperation from other countries. This presents a good opportunity for the declining, due to the public spending cuts, British Defence industry to invest into and to develop the Defence sector in India. However, spending money and resources on strengthening India’s defence without a good reason comes in conflict with the need to assist many of those homeless, poor and deprived people who I saw on the streets of Delhi and Mumbai including those struggling for survival in the slums.
Whilst doing my research for UKIBC I also discovered another opportunity, which in my view is attractive and potentially mutually beneficial both for India and Britain following introduction of the new Indian legislation, which reduces by half the tax on dividends declared by the Indian subsidiaries overseas to the parent company in India. India brought this law in order to encourage ‘repatriation’ of the dividends from the overseas subsidiaries back to the country to remedy the negative effect of the weakened rupee. In my view this presents beneficial investment opportunity not only for India, but also for UK businesses especially those struggling in the current economic climate. The Indian law which allows a generous reduction of taxes from 30 per cent to 15 per cent on dividends repatriated from the foreign subsidiaries back to the parent company in India may encourage such Indian giants as TATA to take over UK companies in order to make profit and declare dividends back to India. Taking advantage of the UK and India double taxation agreement where the dividends declared to India should not in theory be taxed in the UK, this may potentially present an attractive opportunity for the financially strong Indian businesses to acquire struggling UK companies and turn them around to make them profitable, thus helping the UK businesses survive in the current economic crisis.
Overall in the course of the Study India Programme I have discovered a great potential that India holds for the world. This has encouraged me to explore the career opportunities in the organisations having strong ties with India especially in the area of international and commercial law cooperation.
Post by – VITALI SHURANAU