USIBC Welcomes Finance Minister Arun Jaitley's Union Budget as Important First Step Toward India's Economic Revival
WASHINGTON, DC – July 10, 2014 – The U.S.-India Business Council (USIBC) welcomes Finance Minister Arun Jaitley’s 2014-2015 Union Budget as an overall important first step toward India’s economic revival. The industry body commends several of the reforms put forth in the Budget, especially lifting the FDI cap in insurance, as well as policy reforms to reduce transfer pricing challenges and encourage infrastructure investment.
“We commend the Finance Minister for his leadership and welcome these pragmatic, business-friendly policies,” said Diane Farrell, USIBC Acting President. “U.S. companies remain committed to being a long-term partner in India’s growth story.”
USIBC hails the announcement of the insurance composite FDI cap being lifted to 49 percent without any voting rights restrictions as a "sea-change" indicator to the global business community of the new Government's resolve to improve the investment climate and create jobs. USIBC, whose membership includes top global insurers, urges immediate, clean passage of the Insurance Bill in parliament to avoid delay of the investments awaiting final go-ahead from their headquarters based on this long-awaited policy reform. Insurance and pensions providers possess the long-term assets needed to finance the major infrastructure projects India needs most.
USIBC maintains that any retrospective taxation is harmful to India's business climate. Industry is eager for further positive clarifications on this matter to provide imperative tax certainty for investors.
USIBC welcomes India's decision to lift the FDI cap in defense from 26 to 49 percent as an incremental step forward in bolstering India's defense manufacturing capability while leveraging international industrial cooperation. USIBC welcomes greater clarity on the scope of technology transfer required to cross the 49 percent threshold, so as to achieve maximum potential investment in this important sector.
USIBC welcomes the Finance Minister’s positive statement towards linking e-commerce and manufacturing and looks forward to the Government allowing FDI in e-commerce to help this sector flourish.
In his address, the Finance Minister provided several ways to boost India's tourism industry- including expedited E-Visas in major airports, which will also aid global business travelers entering India. Tourism, along with manufacturing and lifting FDI caps, was raised as a high growth-potential opportunity in recent meetings between USIBC Chairman Ajay Banga and Prime Minister Modi and his cabinet.
On infrastructure, USIBC applauds the announcements made on bolstering Smart City development and public-private partnerships in airports – both of which American businesses stand ready to support with capital and expertise.
U.S. investors also praise the bold capital markets reforms announced in the Budget, including favorable tax treatment for Real Estate Investment Trusts (REITs) and domestic corporate bonds which are likely to spur needed liquidity, improved valuations, and foreign investment. USIBC supports the change whereby foreign-based India fund managers may now re-locate to India without constituting a permanent establishment - a needed policy reversal which will grow India's mutual funds industry. Harmonization of "Know Your Customer" requirements across industries is supported by USIBC as an opportunity to streamline efficiencies and encourage financial inclusion.
Formed in 1975 at the request of the U.S. and Indian governments, the U.S.-India Business Council (USIBC) is the premier business advocacy organization advancing U.S.-India commercial ties. Today, USIBC is the largest bilateral trade association in the United States, with liaison presence in New York, Silicon Valley, and New Delhi, comprised of 300 of the top-tier U.S. and Indian companies.
Photo: USIBC Chairman Ajay Banga and Prime Minister Narendra Modi discussing industry’s policy priorities in New Delhi
Press Contact: Kathryn Van Dyken