By Arun Kumar

Washington, Feb 27 (IANS) The US India Business Council has hailed India's new budget saying it lays a strong foundation for the country to attract needed investment, spur innovation and drive inclusive growth for all of its citizens.

Welcoming the recognition of the importance of the insurance sector in driving economic growth, USIBC urged the Indian government to raise the FDI cap in insurance to 49 percent, "which is critical to attracting the long-term capital investment needed to help finance India's ambitious infrastructure build-out."

"India's 2010-11 Budget defines important steps aimed at fuelling growth of its already robust economy, now topping 8 percent GDP, signalling that the global recession of 2008-2009 is already a remnant of the past for India," said the trade advocacy group Friday.

"High points important to business, and particularly US Industry, include a commitment to tackle the state and federal deficit, positive changes to the Customs Code, steps to strengthen and expand the banking and financial sector, and a commitment to simplify FDI procedures across a range of sectors," it said.

Welcoming Finance Minister Pranab Mukherjee comments about the importance of a market-based, private-sector led growth USIBC President Ron Somers said:

"The key to improving the lives of India's citizens is sustainable growth led by a vibrant and competitive private sector."

"This budget's emphasis on infrastructure, education, corporate governance and fiscal responsibility sends a message that the government is ready to take India to double digit growth for the benefit of all its citizens," he said.

USIBC also welcomed the finance minister's acknowledgement of the importance of introducing competition into the retail sector by opening up retail trade. The budget, it said, also took an important step to increase collaboration between the US and Indian entertainment sectors - Hollywood meets Bollywood -by updating the customs code to reflect technological changes in the film and television industry.

But USIBC expressed concerns over increases in excise taxes on a range of products. "Moreover, while the fuel levy is meant to generate additional government revenue, USIBC remains concerned that the higher energy costs could trigger a rise in inflation."

"That said, USIBC is encouraged by a balanced budget that sets an ambitious roadmap to take India to the next level of growth," the trade group said.