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Wishlist for Budget 2025: Strengthening foundations for sustained growth

The Union Budget 2025 will be presented in the Parliament by Finance Minister Nirmala Sitharaman in a 'red bahikhata' on Saturday, 1st February

Countdown begins to Feb 1: FY26 Budget set to become a hallmark document

Illustration: Ajay Mohanty

Sandeep C Patil

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As India’s finance minister prepares to unveil the 2025 budget, investors and economic stakeholders are calling for transformative policies to catalyse the next phase of India’s growth story. Drawing from global best practices while addressing domestic challenges, here is a framework of policy initiatives that could position India for sustainable economic leadership.
 
Tax carrots, not sticks, to drive capital investment
While taxation plays a crucial role in financing government spending and public welfare, a well-calibrated tax regime can also provide incentives to drive reinvestment, growth, and innovation. Introducing a strategic tax deferment programme for reinvested gains could fundamentally alter the current dynamic, where successful exits often lead to capital outflows.
 
 
A model akin to public market investments would position India as a preferred destination for technology investments while ensuring domestic reinvestment into the next generation of ventures. Similarly, bold tax incentives to boost research and development (R&D) activities and promote long-term capital allocation could significantly increase private sector investments.
 
Brain gain, not drain
A nation’s wealth ultimately lies in its people—their innovation, determination, and perseverance. Since independence, India has been a source of brain drain, as some of its brightest minds migrated abroad in pursuit of better opportunities. However, shifting global immigration policies now present India with an unprecedented opportunity.
 
Tightening visa regulations in countries like the United States has created a pool of experienced Indian technology professionals seeking alternative opportunities. Many of these professionals have contributed to cutting-edge innovations in entrepreneurial and commercially savvy companies worldwide.
 
Launching targeted incentives to attract returning diaspora professionals could transform India’s technology sector. While the cultural context differs, Israel’s successful talent repatriation strategies provide a strong case for leveraging intellectual capital to drive national innovation.  READ: ECONOMIC SURVEY 2025
 
Manufacturing renaissance through strategic partnerships
Many highly industrialised nations are experiencing economic stagnation. Germany, once Europe’s industrial powerhouse, is grappling with high energy costs, while Japan is only now emerging from three decades of financial stagnation. These nations—along with others—offer strategic partnership opportunities for technology transfer and manufacturing cooperation.
 
Today, India possesses not just manpower but also skilled talent, political and economic will, emerging infrastructure, diplomatic camaraderie, and domestic stability—making it an attractive partner for industrialised nations.
 
When structured effectively within a comprehensive policy framework, strategic partnerships can be transformative. Recent manufacturing booms in Mexico and Vietnam demonstrate the potential of proactive industrial policies. India, too, can forge partnerships with trusted allies like Japan, Germany, and other like-minded nations to strengthen its industrial base.
 
Economic reforms: Unlocking India's true potential
India’s economic reforms remain a work in progress. Agriculture is often regarded as the backbone of the economy, yet it is also seen as a symbol of India’s delayed industrialisation. However, this perception need not persist.
 
The Indus-Gangetic plains represent one of the largest and most fertile agricultural regions in the world. India should double down on this natural advantage by modernising archaic agricultural laws, eliminating outdated practices, and actively fostering innovation.
 
In the services and manufacturing sectors, further reforms must focus on:
 
Enhancing the ease of doing business
Simplifying regulatory procedures
Strengthening enforcement mechanisms
Clarifying ownership structures
Leveraging digital technology
By streamlining bureaucratic hurdles, India can attract domestic and foreign investment, encourage entrepreneurship, and ensure sustained economic growth.
 
Conclusion: Fortune favours the brave
Success in these initiatives will require conviction, boldness, and resilience. Capturing the opportunities ahead is neither easy nor straightforward. However, the economic, demographic, geopolitical, diplomatic, and financial alignments have never been more favourable.
 
This is not just a once-in-a-lifetime opportunity—it is a once-in-centuries moment. India, along with its leaders and policymakers, must seize this opportunity and forge bravely ahead to solidify its place as a global economic leader. 
The author is Head of Asia and Partner at QED Investors, a US-based fintech-focused global venture capital fund.  Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
 

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First Published: Jan 30 2025 | 9:32 PM IST

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