The U.S.-India Strategic Partnership Forum (USISPF) welcomes the Union Budget 2026–27, presented by the Union Minister of Finance & Corporate Affairs, Set Nirmala Sitharaman, and commends the Government of India for delivering a progressive and comprehensive fiscal framework that supports sustained growth, job creation, and enhanced ease of doing business. The Budget’s focus on technology-driven reforms, sectoral competitiveness, and trade facilitation aligns strongly with USISPF’s priorities and enhances India’s attractiveness as a global investment destination.
USISPF particularly welcomes the comprehensive customs reforms, reflecting a strong commitment to modernising trade processes and strengthening logistics efficiency. The rollout of end-to-end digital and technology-enabled solutions including AI-powered non-intrusive inspection, phased scanning of all containers at major ports, and extension of the Single Window mechanism to express cargo will enhance transparency, reduce dwell times, and streamline cargo movement.
On the tariff front, targeted customs duty rationalisation supports India’s manufacturing and energy transition priorities. Basic Customs Duty has been reduced to nil on critical minerals, solar manufacturing inputs, capital goods for Li-ion Battery Energy Storage Systems (BESS), nuclear power equipment, select electronics and aircraft components and MRO raw materials, and certain critical drugs and medicines. Export sectors such as leather and footwear receive extended duty-free input windows, while baggage duty for personal imports has been rationalised from 20% to 10%. These measures are expected to reduce input costs for sunrise sectors, simplify the tariff structure, and strengthen India’s export competitiveness.
USISPF also welcomes significant reforms in direct taxation and transfer pricing, including simplification of transfer pricing and safe harbour rules to enhance competitiveness and reduce litigation for the IT services sector and Global Capability Centres (GCCs). Key reforms include broadening safe harbour eligibility to ₹2,000 crore, consolidating all IT services into a unified category with a 15.5% safe harbour margin, automating approvals to reduce direct tax interface, and fast-tracking Advance Pricing Agreements (APAs) within a two-year timeline extendable by six months. The extension of the modified return facility is expected to improve predictability and encourage investment.
The Budget provides a long-term tax holiday until 2047 for cloud services provided through local data centres. This landmark policy has the potential to catalyse large-scale global investment, expand export revenues, and drive long-term job creation and capability development. Industry also welcomes measures announced to nurture the local AI, IT, and data centre ecosystem, which will strengthen India’s technology ecosystem, enhance competitiveness, and position the country as a global hub for advanced digital services.
Beyond customs and tax reforms, the Budget emphasises key sectoral focus areas including healthcare, skills development, semiconductors, electronics manufacturing, logistics, and agriculture and allied services. Notably, India Semiconductor Mission 2.0 and a ₹40,000 crore PLI scheme for electronics signal sustained support for high technology manufacturing and supply chain development.
The Government has also announced a high-level committee on Banking to review the banking sector’s structure, efficiency, and preparedness to support India’s next phase of growth while safeguarding financial stability, inclusion, and consumer protection. This initiative is critical for strengthening capital intermediation, mobilising resources efficiently, and enabling investment that drives broad-based economic growth.
Dr. Mukesh Aghi, President and CEO of USISPF, said: “The Union Budget 2026–27 advances critical reforms across customs, taxation, and strategic sectors that enhance competitiveness, boost investment, and modernise India’s economic architecture. The support for semiconductors, electronics manufacturing, healthcare, agriculture, and logistics will help fuel next generation growth. The Government’s banking initiative is also a key enabler for capital intermediation and investment, ensuring that financial resources flow efficiently to fuel growth across sectors.”
“We particularly welcome the Finance Minister’s announcement introducing a long-term tax holiday for cloud services provided through local data centres. This landmark policy has the potential to do for India’s cloud and data centre ecosystem what the IT services incentives did in the early 2000s, catalyse large-scale global investment, expand export revenues, and drive long-term job creation and capability development.”
“Industry also welcomes the measures announced to nurture the local AI, IT, and data centre ecosystem. By incentivising investment, supporting infrastructure, and promoting innovation, these initiatives will strengthen India’s technology ecosystem, enhance competitiveness, and position the country as a global hub for advanced digital services.”
He added:” While the Budget delivers significant policy progress, USISPF remains committed to working closely with the Government to address ongoing industry priorities, including strengthening skills development, accelerating dispute resolution, and enhancing infrastructure and financial sector frameworks. We look forward to a constructive dialogue to ensure that India’s growth journey remains inclusive, forward-looking, and globally competitive.”
USISPF appreciates the Government’s thoughtful consideration of industry inputs and anticipates continued collaboration to strengthen India’s investment climate and deepen U.S.-India economic and commercial ties.