India’s lower house approved a comprehensive tax amendment bill designed to boost manufacturing, streamline rules for foreign businesses, and strengthen its electronics and digital infrastructure sectors, signalling a significant shift in its investment climate.
India’s lower house has passed a tax amendment bill that the government says is designed to draw more investment, support manufacturing and simplify rules for foreign businesses, particularly in electronics, digital infrastructure and global funds. According to the business and finance publication Business Today, the legislation would ease compliance for eligible offshore investment funds and fund managers while keeping safeguards against abuse and round-tripping, a move intended to make it more attractive for global managers to base operations in India.
The bill also widens tax relief for foreign companies linked to India’s electronics push. It extends an existing exemption for firms supplying capital goods, equipment and tooling to Indian contract manufacturers of specified electronic products until the tax year ending March 31, 2041, rather than 2030-31. The list of qualifying goods now includes laptops, tablets, servers, hearables, wearables and related accessories. Business Today reported that the measure is paired with a 15-year income tax exemption for foreign companies storing electronic components in customs-bonded warehouses for onward supply to Indian manufacturers, a step aimed at strengthening the supply chain.
Another set of changes is meant to make India more appealing to cloud and data centre operators. The bill removes approval requirements for foreign cloud service providers using Indian data centres and allows data centres to function on leased infrastructure rather than requiring direct ownership. It also extends tax exemptions until March 31, 2041 for eligible foreign diamond mining companies, brokers, aggregators, sightholders and auction entities selling rough diamonds through notified special zones. For real estate investment trusts and infrastructure investment trusts, the legislation removes a restriction on dividend tax relief and replaces it with a tax levy at the special purpose vehicle level to preserve revenue neutrality. The bill now moves to the Rajya Sabha for further consideration.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
