Indian companies contribute £400 million to UK tax system

11 June 2020 4 min. read
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Indian companies contributed £462 million to the UK’s corporation tax haul in the last year, and employ more than 110,000 people across the country. According to a new study, investors from India represent a major opportunity for Britain as it prepares for a post-Brexit economy.

A trade deal between the UK and India remains a major priority for the Government, post-Brexit, having named the country as one of the top targets for a free trade agreement in the years to come. Reflecting this, Mumbai was among 18 cities targeted by a new GREAT ‘Ready to Trade’ campaign, launched by the UK Government the day after the UK’s formal departure from the European Union. While the Covid-19 pandemic might have diverted attention from this, negotiating a trade deal remains a priority, particularly as the potential for an economically damaging No Deal Brexit is still on the cards.

In a bid to illustrate how important such an agreement could be, audit and advisory firm Grant Thornton has sought to show the value Indian companies already bring to Britain’s economy. According to the study, there are a total of 842 Indian companies in the UK, the same as last year. While the number of firms is consistent, however, the number of jobs this provides has risen by around 6,000, to hit 110,793.

Fastest growing Indian companies’ location in the UK

While Grant Thornton estimates a slim fall in turnover at these firms (compared to £48 billion in 2019, the official turnover of these companies in 2020 is £41.2 billion, but the late filing of accounts for one company made this seem worse, and if 2018 figures were used, turnover would rise to £47.1 billion), their good health has seen them able to pay almost £462 million in corporation tax. As in previous years, London is the preferred location for Indian companies based in the UK. This year, 54% chose the capital as their base, with the north attracted 14% of companies and the south, 11%.

Commenting on the findings, Anuj Chande, Partner and Head of South Asia Group at Grant Thornton UK, commented, “The past year has brought significant international and domestic challenges for both India and the UK. Yet as the global economy slows, the economic connection between the two countries is as strong as ever… As we rebuild the UK economy in the months to come, Indian owned businesses already operating here will continue to play an important role. We anticipate new Indian investments as both the UK and Indian economies start to re-emerge from the shadow of this pandemic.”Top sectorsIndian companies are performing more strongly in specific sectors of the economy. In order to be examined more thoroughly by Grant Thornton’s analysis, firms need a turnover of more than £5 million, year-on-year revenue growth of at least 10% and a minimum two-year track-record in the UK. This year, 72 companies met the qualifying criteria and feature in the 2020 Tracker, achieving an average growth rate of 40%, compared with 36.83% in 2019.

Of the firms which met these criteria, technology and telecoms companies dominate the tracker for the seventh year in a row, accounting for 38% of 2020 tracker companies. Pharmaceuticals and chemicals, and engineering and manufacturing, are also well represented, accounting for 15% and 14% of tracker companies respectively.

With demand for sustainable energy currently spiking, though, it is green energy investment which took the top spot. The fastest-growing Indian company in the UK in Grant Thornton’s 2020 analysis is from the energy sector. Energy Efficiency Services was set up by the Indian Government’s Ministry of Power to create and sustain markets for energy efficiency in India.

The company is committed to investing £100 million in the UK over three years to promote and implement low-carbon, renewable energy solutions. EESL EnergyPro Assets, a joint venture founded by the company, made several acquisitions in 2019 resulting in a growth rate of 715%.