The Union Budget 2025: Can India meet the expectations of foreign investors?

The Indian government is expected to continue to simplify complex regulatory framework that has been a challenge for foreign investors for a long time. The introduction of a single-window clearance system, dilution of compliance burdens, and digital transformation of processes will further help MNCs establish and scale their presence in India.

One of the major expectations of this budget is a robust increase in infrastructure expenditure, especially in logistics, transportation, and digital innovation in order to improve productivity and operational efficiency. The key will be to focus on developing industrial corridors and special economic zones (SEZs) like International Financial Services Center (IFSC) that cater to global investors. This will help integrate the global supply chain while streamlining business operations.

PLI schemes have been a super hit so far and the budget is expected to extend these incentives to trending sectors such as renewable energy. These schemes can help MNCs navigate through financial challenges and cash flow issues linked to mass scale production, eventually helping them achieve a robust business growth ecosystem.

Tax policies play a crucial role in investment decisions and if the Union Budget 2025 can introduce newer tax incentives in prominent areas of infrastructure, technology related innovation, ESG related investments, it will attract lot of attention from foreign investors. These can include tax holidays, rationalised corporate tax rates for newer investments, and accelerated depreciation on capital assets. Such incentives can create a competitive tax environment, encouraging MNCs to consider India as a favorable investment destination.

India recognizes that there is a need for a sense of urgency towards creating a sustainable future in businesses. The government is expected to offer tax breaks to foreign companies investing in green energy and sustainable business practices. This aligns with the business world’s shift towards renewable energy, environment protection and sustainable growth, making India an attractive destination for world at large.

While the MNCs in the India-Europe corridor & India-US corridor deserve a more focused approach, the Union budget is expected to strengthen global trade relations at a broader scale. It’s crucial that India’s long-term strategy to make the country a numero uno investment destination for MNCs across the globe, takes flight through appropriate measures in this budget. Such measures must aim at achieving smoother trade flows, reduced business challenges, and break barriers to expand in newer markets to enhance bilateral trade as well as multilateral trade across the world. These initiatives, if well-defined in the upcoming budget, will not only stimulate economic growth but also strengthen corridors across economies, including the promising India-Europe corridor. Let us hope appropriate reforms will come out in this budget to attract global businesses into India, giving a brilliant head start to the Government to start intensifying India’s powerful presence on the world stage.  

A version of this article was published in The Financial Express Online. The same can be read here