The 2020-21 Budget presented by Finance Minister Nirmala Sitharaman will improve the ease of doing business in India and attract more foreign direct investment, US industry leaders have said.
Presenting her second budget in Parliament on Saturday, Sitharaman offered tax breaks to foreign investors and specifically those like sovereign wealth funds who are willing to place a long-term bet on the economy.
She said the Budget was aimed at boosting incomes and enhancing purchasing power, stressing that the economy's fundamentals were strong and inflation was well contained.
“Despite a slowdown in growth, the global outlook for investment in India remains strong and therefore the budget was a great opportunity to convert the global sentiment into action,” said Mukesh Aghi, president of US-India Strategic and Partnership Forum (USISPF).
Complimenting Sitharaman for taking measures to boost investment in infrastructure sector, including digital, Aghi said the USISPF believed that the budget could have gone further to liberalise sectors such as insurance that are in need of capital.
“On ease of doing business, measures such as simplified GST returns, no audit requirement for MSMEs with up to Rs 5 Cr turnover, instant issuance of PAN by furnishing Aadhaar, pre-filing of tax returns, faceless appeals and assessments will further enhance India's image from an ease of doing business perspective. Together, these steps show that India's tax policy is moving in the right direction,” Aghi said.
Noting that e-commerce is a bright spot of the Indian economy and expected to touch $84 billion by 2021, Aghi urged the government to reconsider its decision to impose one per cent TDS on e-commerce.
“This creates differential treatment of sellers on these platforms and the burden will be ultimately passed on to the consumers,” he said.
Welcoming the budget, the US-India Business Council (USIBC) said that abolition of the dividend distribution tax (DDT) removes a major disincentive to foreign companies seeking to set up operations in India.
The finance minister has taken solid steps to increase foreign investment and boost Make in India, it said.
The announcement on formulating a scheme to encourage electronics manufacture and adapt it for making medical devices is a welcome move, USIBC said, adding the council had made a recommendation in this regard to the finance minister before the budget.
“The decision would result in increased manufacturing in India leading to higher adoption rate for medical electronic equipment due to increased exports and cost-effective production,” it said.
While the USIBC hoped to see an increase in the foreign direct investment (FDI) allowance for the insurance sector in the budget proposal, "we look forward to continued engagement with the government on reforms that are needed to bring fresh investment in a critical sector," the Council said.
Recognizing that India is operating under fiscal constraints, the council continues to advocate for greater investment of resources to modernize India's defence industry and shore up the auto manufacturing sector, a critical driver of India's growth.
Terming the budget as an all-inclusive, growth-oriented and transformative budget, Karun Rishi, President of USA India Chamber of Commerce, said it underlined the Indian government's intent towards building a strong foundation for achieving the goal of making India a $5 trillion economy by 2025.
The budget has unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short, medium and long-term measures, he said.
“Finance Minister Nirmala Sitharaman has given a massive boost to business confidence and entrepreneurship in the country. The much needed National Logistic Policy will benefit trade, business, and generate employment. An increased focus on the infrastructure sector is a welcome step,” Rishi said.