US-India Strategic Partnership Forum Statement on Union Budget 2020

Saturday, February 1, 2020
WASHINGTON, D.C. – USISPF President and CEO, Mukesh Aghi released the following statement on the Union Budget 2020 that was unveiled by the Ministry of Finance:

“USISPF is pleased to see a focus on inclusive growth, aspirational India, ease of living for all citizens, and digital technologies for economic growth in the 2020 Union Budget. However, we believe the budget could have gone further to liberalize sectors such as insurance that are in need capital. 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.”

“On corporate taxation, we are particularly pleased to see the elimination of the dividend distribution tax. Deferring the significant economic presence rules is an applaudable effort to align India’s digital taxation policy with global norms. “On ease of doing business, measures such as simplified GST returns, no audit requirement for MSMEs with up to INR 5Cr 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.”

“Directionally, we see provisions such as creation of an “Investment Clearance Cell” to facilitate investment advisory and continued focus on smart cities projects and electronics manufacturing playing an important role in growing the Indian economy and creating much-needed jobs. As a USISPF hi-tech manufacturing report has indicated, India’s hi-tech manufacturing sector has the potential to offer an additional investment of USD 21 billion and create 550,000 direct jobs and 1,400,000 indirect jobs over the next 5 years.”

“However, we urge the government to move away from further tariffs on ICT products in the budget. It is important for government to continue to improvise its Make in India program. Global companies are looking for alternative sites in Asia and India is uniquely placed to be that destination.”

“We are also encouraged that the government is taking measures to boost infrastructure spending, creating a national logistics policy, and modernizing India’s connectivity. Improving India’s logistics and infrastructure build-out is one area where American companies can contribute significantly.”

“We are encouraged to see a focus on digital infrastructure that will enable private sector to build data center parks throughout the country as well as public funding for the Bharatnet program. The government’s attempts to bolster public consumption through tax holidays on the profit earned on affordable housing projects, optional tax relief to middle income tax payers, rationalizing the tax rates and increasing the disposable income in the hands of the middle class are welcome moves.”

“Startups continue to be the engines of growth for the Indian economy— deferring the tax payment on ESOP granted to employees; and increasing the revenue threshold to INR 100 Cr for claiming profit exemption for a period of 3 years out of first 10 years will allow startups to create jobs and attract more skilled talent. USISPF will work with the government on additional steps it can take to further boost the startup ecosystem in India.”

“Ecommerce is a bright spot of the Indian economy and expected to touch $84 billion by 2021. We therefore, urge the government reconsider its decision to impose 1% TDS on e-commerce. This creates differential treatment of sellers on these platforms and the burden will be ultimately passed on to the consumer.”
“Given the political and fiscal constraints facing the government, we complement Prime Minister Modi and Finance Minister Sitharaman for balancing different priorities.”  

Contact: 

Sukanya Sen
ssen@usispf.org
240-899-4028