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The US-India Strategic Partnership Forum has welcomed the Union Budget, highlighting its focus on technology-driven reforms, sectoral competitiveness, and trade facilitation to attract global investment. Key measures include support for semiconductors, electronics, healthcare, agriculture, and logistics, as well as banking reforms to enhance capital flow. The Budget introduces a long-term tax holiday for cloud services, customs and tariff rationalisation, and reforms in direct taxation, transfer pricing, and the AI, IT, and data centre ecosystem. Initiatives such as the India Semiconductor Mission 2.0 and a INR 40,000 crore PLI scheme demonstrate a commitment to high-technology manufacturing and supply chain development.
The US-India Strategic Partnership Forum (USISPF) has praised the Union Budget, highlighting its focus on technology-led reforms, sectoral competitiveness, and trade facilitation, which are expected to strengthen India's appeal as a global investment destination. Finance Minister Nirmala Sitharaman presented the Budget recently, emphasizing measures to support growth, job creation, and ease of doing business. Advertisement
USISPF said the Budget introduces a progressive fiscal framework aligning with its priorities and advancing reforms across customs, taxation, and strategic sectors to enhance competitiveness and attract investment. The forum particularly welcomed the support for semiconductors, electronics manufacturing, healthcare, agriculture, and logistics, noting these initiatives will drive the next phase of economic growth. The Government's banking reforms were also acknowledged as key enablers to efficiently channel financial resources across sectors.
The forum highlighted the Finance Minister's introduction of a long-term tax holiday for cloud services provided through local data centres. USISPF noted that this landmark policy could replicate the success seen with IT services incentives in the early 2000s, attracting large-scale global investment, expanding export revenues, and generating long-term employment and skill development. Measures supporting the local AI, IT, and data centre ecosystem were also welcomed, as they are expected to strengthen India's technology infrastructure, enhance competitiveness, and position the country as a global hub for advanced digital services.
USISPF also appreciated the comprehensive customs reforms, which include AI-powered non-intrusive inspections, phased scanning of all containers at major ports, and the expansion of the Single Window mechanism for express cargo. These measures aim to improve transparency, reduce dwell times, and streamline cargo movement. Targeted customs duty rationalisation, extended duty-free input windows for export sectors like leather and footwear, and reduced baggage duty from 20% to 10% are expected to lower input costs and boost export competitiveness.
In direct taxation, significant reforms were noted, including simplification of transfer pricing and safe harbour rules. Key measures include expanding safe harbour eligibility to INR 2,000 crore, unifying IT services under a 15.5% safe harbour margin, automating approvals, and fast-tracking Advance Pricing Agreements within a two-year window, extendable by six months. The extension of the modified return facility is seen as an effort to improve predictability and encourage investment.
The Budget also continues to support strategic sectoral priorities, including healthcare, skills development, semiconductors, electronics manufacturing, logistics, and agriculture. Initiatives like the India Semiconductor Mission 2.0 and a INR 40,000 crore production-linked incentive (PLI) scheme for electronics indicate sustained backing for high-technology manufacturing and supply chain development.
Finally, USISPF welcomed the establishment of a high-level committee on banking to review the sector's efficiency, structure, and readiness to support India's growth while maintaining financial stability, inclusion, and consumer protection. This initiative is expected to strengthen capital mobilisation and enable broad-based economic development.
Source PTI
FAQ
Q1. How did the US-India Strategic Partnership Forum (USISPF) respond to the Union Budget?
USISPF welcomed the Union Budget, noting its strong focus on technology-driven reforms, sectoral competitiveness, and trade facilitation. The forum highlighted that these measures are designed to strengthen India's appeal as a global investment destination. By prioritising advanced manufacturing, digital infrastructure, and financial reforms, the Budget is seen as a strategic step toward sustainable economic growth, attracting foreign investment, and creating long-term employment opportunities across key sectors.
Q2. What technology and manufacturing initiatives did USISPF specifically highlight?
The forum emphasised support for semiconductors, electronics manufacturing, healthcare, agriculture, and logistics. Key initiatives include the India Semiconductor Mission 2.0 and a INR 40,000 crore production-linked incentive (PLI) scheme for electronics. USISPF noted that these measures aim to develop high-technology manufacturing capabilities, strengthen supply chains, and position India as a competitive hub for advanced industries globally.
Q3. How does the Budget support the IT, AI, and data centre ecosystem?
The Budget introduces a long-term tax holiday for cloud services provided through local data centres, similar to the incentives that boosted India's IT services sector in the early 2000s. This policy is expected to attract global investment, expand exports, create jobs, and develop skills. Additional support for AI, IT, and data centre infrastructure is expected to enhance India's technological competitiveness and enable the country to become a global hub for advanced digital services.
Q4. What reforms in customs and trade facilitation were highlighted?
USISPF welcomed comprehensive customs reforms, including AI-powered non-intrusive inspections, phased scanning of containers at major ports, and expansion of the Single Window system for express cargo. Measures like duty rationalisation, extended duty-free input windows for export sectors (e.g., leather and footwear), and reduced baggage duty from 20% to 10% aim to reduce logistics costs, improve transparency, and boost export competitiveness, benefiting both domestic and international businesses.
Q5. What changes in direct taxation and transfer pricing were noted?
The forum highlighted simplification in transfer pricing and safe harbour rules, including expanding safe harbour eligibility to INR 2,000 crore, unifying IT services under a 15.5% safe harbour margin, and fast-tracking Advance Pricing Agreements within two years (extendable by six months). Additionally, the modified return facility has been extended to improve predictability and encourage investment. These reforms are intended to reduce compliance burden and attract both domestic and foreign investors.
Q6. How does the Budget address banking sector efficiency and capital mobilisation?
A high-level committee has been established to review banking sector efficiency, structure, and readiness to support India's growth. USISPF highlighted that this initiative aims to enhance financial stability, promote inclusion, protect consumers, and strengthen capital mobilisation. Improved banking efficiency is expected to support investment in strategic sectors, facilitate smoother credit flow, and enable broad-based economic development across the country.
Q7. What is the overall impact of these measures according to USISPF?
According to the forum, the Budget's policies create a progressive fiscal and regulatory framework that encourages investment, enhances competitiveness, and accelerates economic growth. By supporting technology, manufacturing, trade facilitation, and financial sector reforms, India is expected to solidify its position as a global investment hub while generating jobs, improving export performance, and strengthening long-term industrial and technological capabilities.
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