Sunday, February 2, 2025 | New Delhi, India
The United States-India Strategic Partnership Forum (USISPF) commends the Honorable Finance Minister, Smt. Nirmala Sitharaman, and the Government of India for unveiling a robust Union Budget 2025-26. It is a strong blueprint for propelling economic growth toward the government’s vision of a $5 trillion economy. Promoting financial modernization through strategic investments and landmark reforms in the tax structure, the budget signals to investors that India is committed to fostering a resilient, inclusive, and globally competitive economic environment.
The 2025-26 Union Budget maintains the path of fiscal consolidation started four years ago with a projected fiscal deficit of 4.4%, down from 4.8% last year, driven by a large increase in net tax revenues and a moderate increase in expenditures. We especially appreciate the shift in spending priorities this year, with greater attention to domestic consumption to support growth through increased domestic demand. We welcome increased spending outlays for rural and urban development, social welfare, and development of the Northeast states, and note the more moderate increases in capital investments this year, where previous allocations to key sectors such as transportation and telecommunications continue working their way through the investment cycle.
On the policy side, USISPF commends significant reforms in financial services, technology, and agriculture that will continue to attract investment and promote innovation in critical sectors across the economy. We welcome the government’s plan to establish a new Centre of Excellence for Artificial Intelligence (AI) for education, which ties into previous announcements of similar Centres of Excellence in AI for agriculture, health, and sustainable cities. AI will play a key role in strengthening technological ties between the United States and India, particularly as the partnership grows through initiatives like the Initiative for Critical and Emerging Technology (iCET).
USISPF also appreciates the government’s decision to remove the cap on foreign direct investment and simplify the governance constraints in the insurance sector. This landmark reform will unlock fresh capital, drive innovation and investment, expand nationwide insurance penetration, and send a clear signal that India is committed to creating a globally competitive and investment-friendly sector. We also applaud the government’s plan to revamp the Central Know-Your-Customer (CKYC) Registry, a landmark reform that will simplify KYC processes, boost financial inclusion, and foster a more efficient, secure, and accessible financial ecosystem for all.
On the tax side, the budget introduces a major overhaul of India’s tax framework, with a strong focus on simplifying compliance and creating incentives for investment across key sectors. In a further bid to invigorate domestic demand, the budget introduces significant income tax reforms, including an increase in the income tax limit, which will increase disposable income for millions of taxpayers. The subsequent increase in household spending will fuel a virtuous cycle of investment and consumption that will benefit the broader economy.
The customs duty structure is simplified, reducing the number of tariff rates to eight, and significant duty cuts are introduced for telecom infrastructure, laboratory chemicals, and essential medicines. Structural reforms include full digitalization of customs processes, decriminalization of over 100 provisions, and a fixed three-year timeline for transfer pricing audits. These measures collectively position India for long-term economic growth, regulatory stability, and enhanced global competitiveness.
Dr. Mukesh Aghi, President and CEO of USISPF, said, “USISPF is confident that the budget will accelerate India’s economic growth, drive increased investments, job creation, and innovation, while further cementing its status as a global economic powerhouse. We eagerly anticipate the positive impact of these measures on the Indian economy attracting more American investments into India and the deepening of economic and commercial ties between our two democracies. USISPF remains steadfast in supporting the government’s vision for a prosperous and inclusive India”. He added, “The comprehensive measures—from removing the FDI cap in the insurance sector and simplifying KYC processes to increasing the income tax limit—are set to stimulate economic activity, boost consumer spending, and revive the ‘animal spirit’ of the economy.”
Mr. Tarun Bajaj, Chairperson of the US-India Tax Forum, added, “The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, lays out a roadmap for boosting consumption and accelerating growth and employment. It has a strong focus on simplifying the tax regime, boosting domestic manufacturing, and on ease of doing business/deregulation and decriminalization. The budget emphasizes “Make in India, make for the world” and aims to strengthen India’s position as a global economic powerhouse”.
Mr. Bajaj added, “A cornerstone of the budget is the announcement of the new Income Tax Bill, designed to simplify the tax laws. International taxation reforms aim to create a more favorable environment for cross-border businesses. Expanded safe harbor rules and rationalization of TDS and TCS provisions are expected to reduce complexities and encourage foreign investment.”
For additional information, please contact:
Ankit Jain
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Akshobh Giridharadas
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About the US-India Strategic Partnership Forum (USISPF):
The US-India Strategic Partnership Forum (USISPF) is committed to creating the most powerful partnership between the United States and India. As the only independent not-for-profit institution dedicated to strengthening the U.S.-India partnership in Washington, D.C., and in New Delhi, USISPF is the trusted partner for businesses, non-profit organizations, the diaspora, and the governments of India and the United States.
