Union Budget 2026 advances critical reforms across customs, strategic sectors that boost investment: US-India Strategic Partnership Forum
USISPF praised the Government of India for introducing a “progressive and comprehensive fiscal framework that enhances sustained growth, job creation and 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,” it said in a statement.
USISPF President and CEO Mukesh Aghi said in a statement that the Budget advances critical reforms in customs, taxation and strategic sectors that enhance competitiveness, increase investment and modernize India’s economic architecture.
“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 financial resources flow efficiently across sectors to accelerate growth,” he said.
USISPF particularly welcomed the Minister of Finance’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 center ecosystem what IT services incentives did in the early 2000s, catalyzing large-scale global investment, boosting export revenues and stimulating long-term job creation and talent development.” he said.
“The industry also welcomes the measures announced to nurture the local AI, IT and data center ecosystem. By encouraging investment, supporting infrastructure and encouraging innovation, these initiatives will strengthen India’s technology ecosystem, enhance competitiveness and position the country as a global hub for advanced digital services,” he said.
He added that while the Budget delivers significant policy progress, USISPF is committed to working closely with the Government to address ongoing sector priorities, including strengthening skills development, accelerating dispute resolution and enhancing infrastructure and financial sector frameworks.
“We look forward to constructive dialogue to ensure India’s growth journey remains inclusive, forward-looking and globally competitive.”
USISPF particularly welcomed the comprehensive customs reforms, which reflect a “strong” commitment to modernizing trade processes and strengthening logistics efficiency.
It was stated that the introduction of end-to-end digital and technology-enabled solutions, including AI-powered non-invasive inspection, progressive scanning of all containers in major ports and extension of the Single Window mechanism for express cargo, will increase transparency, reduce waiting times and facilitate cargo movement.
On the tariff front, USISPF said the targeted tariff rationalization supports India’s manufacturing and energy transition priorities.
Duty-free entry windows have been extended to export sectors such as leather and footwear, while baggage tax on personal imports has been rationalized 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,” he said.
USISPF welcomed significant reforms to direct taxation and transfer pricing, including the simplification of transfer pricing and safe harbor rules, to increase competitiveness and reduce litigation for the IT services sector and Global Capability Centers (GCCs).
Key reforms include expansion of safe harbor eligibility to ₹2,000 crore, consolidation of all IT services into a unified category with 15.5% safe harbor margin, automating approvals to reduce direct tax interface and fast-tracking of Advance Pricing Agreements (APAs) within a two-year timeline extendable by six months.
Expanding the modified return facility is expected to increase predictability and encourage investment.
Noting that the budget provides for a long-term tax holiday until 2047 for cloud services provided through local data centres, USISPF said the policy has the potential to stimulate large-scale global investment, increase export revenues and stimulate long-term job creation and talent development.
The industry also welcomes the measures announced to nurture the domestic AI, IT and data center ecosystem that will strengthen India’s technology ecosystem, increase competitiveness and position the country as a global hub for advanced digital services.
Beyond customs and tax reforms, the budget highlights key sectoral focus areas including healthcare, skills development, semiconductors, electronics manufacturing, logistics, agriculture and related services. In particular, the India Semiconductor Mission 2.0 and the ₹40,000 crore PLI scheme for electronics signal continued support for high-tech manufacturing and supply chain development.
The government also announced setting up a high-level committee on Banking to review the structure, efficiency and preparedness of the banking sector to support India’s next phase of growth while maintaining financial stability, inclusion and consumer protection. This initiative is critical to strengthening capital intermediation, mobilizing resources efficiently and ensuring investments that drive broad-based economic growth.
