India’s lower house has approved a comprehensive tax overhaul aimed at attracting long-term global capital, enhancing incentives for electronics production and easing conditions for overseas investors amid efforts to strengthen its position in international supply chains.
India’s lower house has approved a tax overhaul aimed at making the country a more dependable destination for global capital, with the government using the legislation to deepen incentives for electronics manufacturing, ease rules for overseas fund managers and extend tax relief for some foreign investors.
The Taxation and Other Laws (Amendment) Bill, 2026, passed on August 6, replaces an ordinance issued earlier this year and makes changes to the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007. The government says the package is designed to reduce compliance burdens, improve tax certainty and strengthen India’s place in global supply chains.
A central feature is an extended tax holiday for foreign companies supplying capital goods, equipment and tooling to Indian contract manufacturers making specified electronic products. According to legal and tax commentaries on the Budget proposals, the relief is meant to support electronics manufacturing by giving overseas suppliers longer-term certainty. The amended framework extends the exemption to March 31, 2041 and covers products including mobile phones, laptops, tablets, personal computers, servers, hearables, wearables and associated parts and accessories.
The Bill also creates a 15-year tax exemption for foreign companies that keep electronic components in customs-bonded warehouses before supplying them to Indian manufacturers. That measure is intended to reinforce the logistics chain around electronics production and make India more attractive for long-horizon investment decisions. Industry analyses of Budget 2026 also link the move to a wider push to build out cloud, data centre and digital infrastructure capacity alongside manufacturing.
The legislation further relaxes conditions on global investment funds managed from India, while keeping anti-abuse safeguards in place. It also grants tax exemptions to eligible foreign portfolio investors and the Bank for International Settlements on interest and capital gains from Indian government securities, subject to reporting requirements. Taken together, the changes are meant to draw in long-term capital, encourage more high-value financial activity in India and support the government’s broader manufacturing strategy.
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.
