US-India Business Council, the premier advocacy organisation representing the largest US companies investing in India, has welcomed Finance Minister P Chidambaram's Budget for the fiscal year 2007-08, calling it 'reassuring.'
"From the US industry's standpoint, it gives us comfort that the finance minister appreciates and understands that the fundamental challenges (of the Indian economy) must be addressed in order to sustain a nine per cent GDP in the economy," Ron Somers, president, USIBC, told rediff.com in a brief interview.
Somers said that the US industry is particularly pleased by the further reduction in peak customs duty rates from 12.5 per cent down to 10 per cent, further reductions in customs duties on chemicals, plastics and other materials to 7.5 per cent, a reduction in customs duties on medical equipment to 7.5 per cent, an increase in defense expenditures, and the extension of 'pass-through' status for venture capital funds invested into a number of growth industries.
The US industry, USIBC said, also welcomes other initiatives outlined by Finance Minister Chidambaram, particularly a reiteration of his pledge to introduce an amendment to the Insurance Act that will provide greater scope for foreign investment into the sector, escalating the Advanced Power Development and Reforms Project, as well as new thrusts on reforming education, agriculture, infrastructure and financial services.
Somers, however, acknowledged that Chidambaram did not raise a few critical issues that USIBC members had hoped to see addressed in the fiscal Budget, including taxation issues related to transfer pricing for IT service operations, and an extension of the Software Technology Parks of India tax incentive.
"For the industry there are issues that everyday USIBC is pushing on and working on, but let the Budget be the Budget and let us continue with our business -- advocacy throughout the normal course of business," Somers said.
However, Somers said the USIBC members were overall satisfied with the Budgetary proposals. "This Budget is in keeping with recent past practices where there were no big bang announcements being made; this is a matter of fact reporting on the fiscal and Budgetary situation for the coming year and so the industry did not expect this Budget to include any big bang announcements," Somers said.
"This is prudent given the fact that announcements should not be necessarily included in the Budget. Whenever announcements are ready to hatch they will hatch," he added.
Somers said that USIBC feels that the budgetary proposals should be able to achieve a balance of promoting infrastructure growth while combating inflation, and provide new opportunities for American companies to engage in the Indian market.
"The Budget is clearly geared towards addressing the inflationary pressures adversely affecting the Indian economy, focusing on bringing much needed infrastructure investment into the country, on combating HIV/AIDS, which is going to be a pernicious social problem if not tackled in early stages, and lastly focusing on the knowledge initiative and education to sustain the growth rate," Somers said.
"The focus and the thrust is, I think, reassuring because some of the fundamental challenges that are going to be affecting the sustainability of the economy are clearly addressed in this Budget. And these are inflation, the health of the workforce, the educational foundation and the need to infrastructure investments into the economy. All these have all been addressed in this Budget," Somers said.
