USIBC endorses Indian Budget as Attractive

WASHINGTON (TIP): American companies, either those with a foothold or who are planning to set foot in India, are bullish on the latest budget presented by the Modi government, business advocacy group U.S.-India Business Council has said.

“We talked to some of our members on the feedback, and they have been bullish about the budget itself. I feel that its investment in infrastructure, in trying to provide ease of doing business and providing certain tax certainties is good for U.S. investors,” Mukesh Aghi, USIBC president, told PTI in an interview Feb. 29.

Aghi said the annual budget presented by Union Finance Minister Arun Jaitley maintains the fiscal deficit at 3.5 percent from 3.9 percent and gives international investors an assurance that India can provide discipline among emerging markets.

Referring to the fact that foreign direct investment in India is up by 40 percent, Aghi, who was recently in India for the Make in India summit in Mumbai, said the move sent a positive signal to the global market.

“The sentiment (on India among U.S. companies) is on the positive side,” Aghi said in response to a question, hoping that this would bring much greater American investment to India.

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U.S. companies have made $15 billion worth of FDI in India in the last 18 months and are expected to invest another $27 billion this fiscal year, he said, adding that with the latest budget, this figure is expected to go up.

The infrastructure sector and food retail industry provide a lot of opportunities for investment, he said. Allowing 100 percent FDI in the marketing of food produced in India will likely bring in new investors who will provide the needed manufacturing and retail jobs, he said.

“This will help farmers increase sales, spur investment in cold chain and storage infrastructure to make sure food is better preserved, and bring new and diverse food products to a larger percentage of the Indian population than ever before,” Aghi said.

The USIBC president also lauded the Union Finance Minister for creating an investment-friendly climate even as he said U.S. firms are expecting to roll out of the Goods and Services Tax, which can be a “game changer” for the country’s economy.

“Tax reforms presented in this budget are unprecedented and lay the road map to creating an attractive environment for foreign investors. U.S. companies are still eager for the implementation of GST that has the potential to be a game changer for the economy. This is also an inclusive budget -one that creates opportunities for increasing domestic demand,” Aghi said.

“The message is that U.S. companies are very bullish on India,” Aghi said, adding that the large section of U.S. FDI in India is going into the IT sector and manufacturing environment.

Responding to a question, he said USIBC members feel India could move a bit faster on the corporate tax reduction. The American corporate sector, he noted, is looking forward to the intellectual property policy coming out. “I would say a big chunk of the issues were addressed (in the budget),” he said.

“Yes, we have made progress. But the issue is we should benchmark every state with let’s say Singapore or Hong Kong. We should not measure states within India with each other. We need to raise the bar,” he said.

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