The Indian government has tabled a new bill in the Lok Sabha aimed at boosting foreign capital, stabilising policy environment for domestic manufacturers, and simplifying regulations for global firms, amidst geopolitical tensions and supply chain disruptions.
India’s government has brought a fresh tax and regulatory bill to the Lok Sabha, setting out a package designed to pull in more foreign capital, give domestic manufacturers a steadier policy backdrop and make it easier for global firms to operate in India. According to KNN, Finance Minister Nirmala Sitharaman introduced the Taxation and Other Laws (Amendment) Bill, 2026, on Tuesday, with the proposal meant to replace the Income-tax (Amendment) Ordinance, 2026 and amend several laws, including the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025 and the Finance Act, 2026.
The bill arrives at a time when the government is trying to cushion Indian industry from a choppier global environment. Sitharaman pointed to geopolitical tensions and disruptions in trade and supply chains as the backdrop for the changes, saying the aim is to reduce external shocks and support sectors most exposed to them. For businesses, that matters because policy certainty often shapes where companies choose to set up factories, warehouses and regional hubs.
A major thrust of the bill is electronics manufacturing, where India has been trying to deepen local production rather than remain just a large market. KNN said the proposal would extend a tax break for foreign companies that supply machinery and tools to Indian electronics makers by 10 years, taking the benefit to 15 years, or until the end of FY2041. It also spells out which products qualify, including mobile phones, laptops, personal computers, tablets, servers and related components, a move that should reduce ambiguity for investors planning multi-year projects. The bill also proposes a full 15-year tax exemption for foreign firms storing electronic components in customs bonded warehouses for supply to domestic manufacturers, replacing the present presumptive tax approach.
The changes go beyond factories. The bill seeks to make India more attractive to offshore funds managed from the country by trimming tax rules down to essential anti-abuse safeguards. That could matter for global asset managers weighing whether to run operations from India or from offshore centres such as Singapore. It also seeks to restore dividend tax exemption for investors in REITs and InvITs, even where the underlying structures have chosen the new tax regime, with the revenue impact to be offset through an additional surcharge at the special purpose vehicle level. For retail investors, that is a useful signal that the government still wants these vehicles to remain attractive as income-generating products.
The draft law also tries to open the door wider for foreign participation in data centres and digital infrastructure. KNN reported that the bill would remove the need for separate government notifications for foreign cloud firms and Indian data centres, while allowing leased models rather than limiting operators to owned facilities. That is a practical shift in a sector where capital costs are high and flexibility matters. The broader pattern fits with a busy year of rule-making in India, from the recent notification of the Industrial Relations Code (Amendment) Act, 2026, to the introduction of a separate MSME payments bill and a revised RBI framework for foreign investors in government securities, all pointing to a wider push to make formal investment and compliance a little less cumbersome.
The amendments will need parliamentary approval before they take effect. If passed, they would add to a policy mix aimed at signalling that India wants more long-term foreign money, especially in manufacturing, digital infrastructure and investment vehicles that feed real economic activity rather than short-term financial flows.
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