Hailing the maiden budget of the new Indian government as the first step towards the country's economic revival, the USIBC today welcomed the increase in FDI limit in two key sectors of insurance and defence, a long-pending demand of the American business community.
"The US-India Business Council (USIBC) welcomes Union Finance Minister Arun Jaitley's 2014-2015 Union Budget as an overall important first step toward India's economic revival," the council said in a statement.
It commended several of the reforms put forth, especially lifting the foreign direct investment (FDI) cap in insurance, as well as policy reforms to reduce transfer pricing challenges and encourage infrastructure investment.
"We commend the Finance Minister for his leadership and welcome these pragmatic, business-friendly policies," said Diane Farrell, USIBC acting president.
"US companies remain committed to being a long-term partner in India's growth story," she added.
USIBC hailed the announcement of the insurance composite FDI cap being lifted to 49 per cent without any voting rights restrictions as a "sea-change" indicator to the global business community of the new government's resolve to improve the investment climate and create jobs.
At the same time, it urged immediate, clean passage of the Insurance Bill in parliament to avoid delay of the investments awaiting final go-ahead from their headquarters based on this long-awaited policy reform.
Insurance and pension providers possess the long-term assets needed to finance the major infrastructure projects India needs most, it said.
Maintaining that any retrospective taxation is harmful to India's business climate, USIBC said industry is eager for further positive clarifications on this matter to provide imperative tax certainty for investors.
India's decision to lift the FDI cap in defence from 26 to 49 per cent is an incremental step forward in bolstering defence manufacturing capability while leveraging international industrial cooperation, it said.
USIBC welcomed greater clarity on the scope of technology transfer required to cross the 49 per cent threshold, so as to achieve maximum potential investment in this important sector.