by AMIT ROY
Business leaders hope for May move
BRITAIN’S influential Indian business community wants prime minister Theresa May to push ahead with as soft a Brexit as possible – rather than be toppled for a hardline Brextremist.
There are real worries that following the resignations earlier this week of David Davis and Boris Johnson as Brexit secretary and foreign secretary respectively, a section of the Conservative parliamentary party, backed by Brexit-supporting lobby groups outside, are campaigning to replace May with another leader more in tune with their anti-EU sentiments.
A report compiled jointly by Grant Thornton, “one of the world’s largest professional services network of independent accounting and consulting member firms”, and the Confederation of Indian Industry (CII) has already drawn attention to the contribution made by Indian companies to the UK economy.
The report summed up: “This year, our research identified approximately 800 companies operating in the UK, with combined revenues of £46.4 billion (£47.5bn in 2017).
“Together, they paid £360 million in corporation tax (£276.7m in 2017) and employed 104,932 people (105,268 in 2017). This shows the continued importance of the contribution that Indian companies make to the UK economy.”
Commenting on the consequences of the political upheaval this week, Anuj Chande, a corporate finance partner and head of the South Asia Group for Grant Thornton UK, told Eastern Eye: “Our view is that most of the 800 Indian companies would prefer a soft Brexit rather than a hard one.”
He added: “A number of them have operations and trade in Europe and they would want to continue to get easy access.” He acknowledged“there will inevitably be some for whom neither a hard nor a soft Brexit makes a difference”.
But he also pointed out: “A number of Indian companies have set up operations in UK as a launch pad into Europe.
“Whilst the UK in a hard exit environment still offers the attractions of low corporate tax rates, ease of doing business, favourable personal tax rules on domicile to name a few, these companies will be adverse to a hard landing.”
Chande referred to the warning sounded by Tata-owned Jaguar Land Rover: “We have already seen the largest Indian employer in the UK – JLR – raise concerns on access to markets and impact on its supply chain.
“There will be other smaller Indian players who will also have similar issues albeit on a much smaller scale.”
He emphasised that to the nearly 105,000 people employed by the UK subsidiaries had to be added “20,000 to 25,000” staff employed by the British branches of companies with head offices based in India. The calculation also did not take into account the numbers employed by British Asian businesses.
Conservative Lord Jitesh Gadhia, an investment banker with intimate knowledge of the
Indo- British business scene, commented: “Delivering Brexit is massively complicated because there are many versions of how we can leave the EU – and different consequences of each option.
“Brexit involves untangling over 40 years of deeply-integrated and intertwined structures and processes with the EU. So it is important to listen to the voice of business in achieving an outcome in the national economic interest.”
He entered an important qualification in commending the prime minister’s soft Brexit proposals which do not cover services.
“Whilst it is important for the topic of customs and the free and easy movement of goods to be thrashed out – let’s also remember that 80 per cent of the UK’s GDP comes from services,” he said.
“It is therefore non-tariff barriers and market access issues that are much more important for these sectors.”
He went on: “All the evidence shows that financial and professional services are at the heart of the success of the British Asian communities in UK.
“A staggering 32 per cent of Indians work in professional industries compared to an average of 20 per cent across the population. We provide the human capital engine for large parts of the economy.
“These sectors have also provided a powerful engine for social mobility because they are rooted in meritocracy. Any Brexit deal must therefore cover trading in services as well as goods.
“Above all, let’s not forget the great British tradition of pragmatism as we leave the EU. It is important to put our prosperity, jobs and security ahead of any ideology.”
At a personal level, Johnson is an immensely popular figure among British Indians, partly because he knows India well and has close links with the country through his half-Sikh wife, Marina Wheeler.
He also wants to see an increase in the number of Indian students coming to the UK and wants their number – unlike May – taken out of the migration statistics.
But on the question of Brexit, the two sides part company. One of Johnson’s great heroes is Winston Churchill but he is considered by many Indians to be a “war criminal” because of his complicity in causing the deaths of three-five million people during the 1943 Bengal famine.
The businessman Dr Rami Ranger, appointed co-chairman with Zac Goldsmith of Conservative Friends of India, is happy to raise funds for the Tory party in his capacity as one of its treasurers. But donations will dry up if the interests of the Indian business community are threatened.
“Brexit means Brexit,” May once famously declared, but appeals by businesses have persuaded her that a hard Brexit would be damaging to the British economy and lead to a loss of jobs.
It is understood she was particularly swayed by the reasoned arguments advanced by JLR.
The firm has said a bad Brexit deal would cost the company more than £1.2bn in annual profit.
The car industry makes better use of the free and frictionless trade offered by Europe’s single market than almost any other sector: every car that rolls off the production line in a UK plant is made up of tens of thousands of parts that between them will have made hundreds of thousands of movements across the continent.
JLR, the UK’s biggest carmaker, has stressed its “heart and soul is in the UK”. But without frictionless trade JLR said its UK investment plans would be in jeopardy.
Its chief executive Ralf Speth said: “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year. As a result, we would have to drastically adjust our spending profile.
“We have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five. This would be in jeopardy should we be faced with the wrong outcome.”
He said the firm urgently needed “greater certainty” to continue to investing heavily in the UK.
Speth told the Financial Times: “If I’m forced to go out because we don’t have the right deal, then we have to close plants here in the UK and it will be very, very sad. This is hypothetical, and I hope it’s an option we never have to go for.”
But the warning was not lost on the prime minister.
Professor Anand Menon
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