Tata Group Chairman Ratan Tata has called on Britain to improve the competitiveness of its manufacturing sector, as he issued a warning about the high costs of doing business in the country.

A combination of factors including the tough economic conditions, the high costs of being a manufacturer in the country, and a “dying” supply chain meant the country was “not the first place you would look at to make a manufacturing investment,” Tata told the Daily Telegraph newspaper in an interview published on Wednesday. However, the company did not intend to cut back in the UK “or close down anything if we can help it, but to grow as much as we can in the UK and also other parts of the world.”

Tata’s comments came as Britain’s Chancellor of the Exchequer George Osborne unveiled a raft of measures to stimulate investment and cut the deficit, as he announced that the country was set to miss his own targets on debt reduction, and would be extending his austerity programme by one more year to 2018. Among the measures announced to stimulate investment is a one per cent cut to corporation taxes, which will fall to 21 per cent by 2014.

The Tata Group, which owns Jaguar Land Rover, Tata Steel and Tetley Tea, has previously expressed its concerns about British government policies, particularly environmental measures, such as the world’s first carbon floor. The group has warned that this policy, in particular, could render Britain uncompetitive even within Europe.

Tata pointed to a number of policies that could help increase competitiveness of the industry, including incentives to set up plants, have research and development and buy technology, rather than handouts to industry.

Tata’s comments come as conditions continue to weaken for Britain’s manufacturing sector. A survey published by the manufacturers organisation EEF earlier this week, found that output and order balances were the lowest since 2009, with the weakness expected to continue into 2013.

Critics of government policy have warned that its strong focus on austerity, rather than growth programmes is exacerbating industry’s problems. Following the announcement of some 900 job losses at Tata Steel’s British operations last month, unions launched an attack on government policy, calling for faster investment in infrastructure programmes, and other measures of support similar to those provided in France and Germany.

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