While international media outlets praised India's commitment to infrastructure spending and strategic manufacturing investments, markets and foreign portfolio investors delivered a harsh verdict: equity benchmarks tumbled as traders digested higher transaction taxes and what many deemed insufficient incentives to attract the mobile global capital that emerging markets desperately compete for.

The divergent reactions underscore a fundamental tension in India's economic strategy—whether to prioritize long-term structural transformation or deliver the immediate investor-friendly measures that Wall Street and the City of London demand.

The Financial Times framed the budget as India's attempt to shield itself from gathering trade storms, particularly renewed protectionist threats from Washington. With capital expenditure reaching a record 12.2 trillion rupees ($143 billion), Sitharaman doubled down on infrastructure, semiconductors, and biopharmaceuticals—sectors critical to positioning India as an alternative to China in global supply chains.

"India is playing the long game," said one London-based emerging markets analyst quoted in FT coverage. "The budget signals that New Delhi won't be panicked into short-term giveaways, even if markets punish that discipline."

The budget's centerpiece for multinational corporations came in the form of a 20-year tax holiday for foreign cloud computing firms using Indian data centers—a measure Reuters described as potentially transformative for the country's ambitions as a global digital hub. Tech giants including Microsoft, Google, and Amazon have collectively committed billions to Indian data infrastructure, and the tax certainty through 2047 provides the long planning horizon these capital-intensive investments require.

Similarly, the government extended tax holidays for businesses in Gujarat's GIFT City financial center from 10 to 20 years, with a subsequent flat 15% tax rate designed to compete with Singapore and Dubai for international finance operations.

Yet these long-term inducements couldn't offset immediate market disappointment. Indian equities sold off sharply on budget day, with foreign portfolio investors particularly rattled by increases to securities transaction taxes and the absence of measures they'd lobbied for—clearer foreign investment rules, lower capital gains taxes, or incentives specifically targeting international institutional money.

Reuters reporting noted that the budget failed to address concerns about recent foreign outflows, with some $15 billion in portfolio capital having exited Indian markets in recent months. The higher derivatives trading taxes—intended to curb speculation—instead sparked worry about market liquidity and competitiveness versus other Asian exchanges.

"The government chose fiscal prudence over market expediency," a Mumbai-based fund manager told Reuters. "That's admirable from a governance standpoint but frustrating if you're trying to deploy capital into India this quarter."

The Washington Post's international business coverage emphasized this duality, characterizing the budget as "sound macroeconomic stewardship" that nonetheless left equity and debt investors wanting more aggressive liberalization. While measures to deepen corporate bond markets and improve currency market infrastructure drew praise as medium-term positives, they offered little immediate catalyst for capital inflows.

The budget arrives as Trump's return to the White House threatens to upend global trade architecture. His campaign promises of universal tariffs and specific targeting of countries running large trade surpluses with America pose obvious risks to India's export ambitions.

Sitharaman's response appears calculated to make India indispensable to Western companies seeking to diversify away from China. Record infrastructure spending aims to eliminate the logistics bottlenecks that have historically frustrated manufacturers. Targeted support for electronics, semiconductors, rare earth processing, and textiles reflects sectors where global firms are actively seeking alternative production bases.

BBC coverage, drawing on Associated Press reporting, emphasized the budget's focus on "domestic manufacturing and fiscal responsibility" as twin pillars designed to weather global uncertainty. The narrative stressed that India maintained fiscal discipline—a deficit target of 4.3% of GDP and debt at 55.6%—even while boosting growth-oriented spending.

For multinational corporations evaluating India against Vietnam, Mexico, or other manufacturing alternatives, this fiscal stability matters. It signals that India's growth model isn't built on unsustainable stimulus that could trigger currency or debt crises down the road.

The disconnect between government priorities and investor expectations reflects deeper questions about what India needs to accelerate foreign capital flows.

Industry groups like the U.S.-India Business Council praised the technology focus and investment facilitation efforts. The 20-year tax holidays for cloud services and GIFT City operations demonstrate India can offer competitive incentive packages when it chooses.

Yet credit rating agencies and foreign analysts described the budget as "tactical rather than transformational"—competent housekeeping that doesn't fundamentally alter India's investment climate relative to competitors.

CNN and Wall Street Journal coverage, typically attuned to institutional investor sentiment, would likely emphasize that foreign portfolio investors watch budgets for signals about ease of doing business, repatriation rules, and tax certainty. The absence of bold moves on these fronts—coupled with higher trading taxes—explains the market disappointment even as the budget's macro framework remained sound.

The Economist, in its characteristic focus on structural reforms, would probably note that while India's budget affirms its growth trajectory, it doesn't match the liberalization aggressive emerging markets pursue to capture footloose global capital.

Sitharaman's budget represents a wager that India's growth fundamentals—demographics, digitalization, and domestic consumption—are strong enough that the country needn't chase hot money with aggressive tax cuts or deregulation that could compromise fiscal stability or domestic policy priorities.

The 6.5% growth projection, fastest among major economies, provides cushion for this approach. India can afford to be selective about which foreign capital it courts and on what terms.

Whether this gamble pays off depends on execution. If the infrastructure investments materialize, if manufacturing capacity expands as planned, if the digital economy continues booming, then India strengthens its negotiating position with foreign investors who'll eventually need access to a market heading toward 1.5 billion consumers.

If growth disappoints, if global conditions deteriorate faster than expected, if Trump's tariffs prove more damaging than anticipated, then the government may face pressure to deliver the investor-friendly reforms it's thus far avoided.

For now, Western media reaction suggests cautious respect for India's fiscal discipline and long-term thinking, tempered by skepticism that the budget does enough to attract the foreign capital that could accelerate growth further.

As one Financial Times analysis put it, the budget "stops short of being a game-changer that will dramatically shift global capital allocation toward India"—high praise for competence, faint praise for ambition.

In an era of global economic uncertainty and rising protectionism, India has chosen the steady path over the spectacular. Whether that proves wisdom or missed opportunity may not be clear now. (IPA Service)