India’s lower house has approved new legislation to extend tax benefits for foreign investors and electronics suppliers, signalling a strategic move to boost domestic production and embed itself more deeply into global supply chains.
India’s lower house has passed legislation that would widen tax relief for foreign investors and electronics suppliers, as New Delhi seeks to position itself more firmly as a destination for global capital. The Taxation and Other Laws (Amendment) Bill, 2026, approved on August 6, replaces an earlier ordinance and revises provisions in the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007. The government says the aim is to improve tax certainty, trim compliance burdens and strengthen India’s role in international supply chains.
The most significant change concerns electronics manufacturing. The Bill extends the tax break for overseas companies supplying capital goods, equipment and tools to Indian contract manufacturers producing specified electronic products until March 31, 2041. That is a longer horizon than earlier budget material, which had pointed to an exemption ending in 2030-31. The covered products include mobile phones, laptops, tablets, personal computers, servers, hearables and wearables, along with related parts and accessories. The measure is intended to support large, capital-intensive investment in the electronics ecosystem.
The legislation also creates a 15-year tax exemption for foreign companies that keep electronic components in customs-bonded warehouses before supplying them to Indian manufacturers of qualifying products. In parallel, it loosens restrictions on global investment funds managed from India. Existing rules on investor numbers, fund size, concentration and individual participation will be rationalised, while safeguards against misuse and round-tripping remain in place. The government believes the changes could draw more fund-management activity into India and support higher-value financial services jobs.
Another provision would exempt eligible foreign portfolio investors and the Bank for International Settlements from tax on interest and capital gains earned from Indian government securities, subject to reporting requirements. Taken together, the changes fit a broader industrial policy push. Recent budget proposals also backed a second tranche of semiconductor incentives and a larger electronics component manufacturing scheme, underlining the government’s effort to deepen domestic chip and device production while attracting foreign suppliers and long-term capital.
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