Bill Seeks To Make India A Global Investment Hub
The Lok Sabha has passed the Taxation and Other Laws (Amendment) Bill, 2026, a legislation aimed at attracting foreign investment, strengthening manufacturing and making India a more predictable destination for global capital.
The Bill, passed on August 6, replaces the Income-tax (Amendment) Ordinance, 2026, issued earlier this year. It amends the Income-tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007.
The government says the reforms are intended to provide greater tax certainty, reduce compliance and regulatory burdens, and strengthen India’s position in global supply chains.
Electronics Manufacturing Gets Tax Benefits Till 2041
One of the biggest changes is the extension of tax incentives for foreign companies supplying capital goods, equipment and tools to Indian contract manufacturers producing specified electronic products.
The tax exemption, which was earlier available until 2030-31, has now been extended until March 31, 2041.
The legislation also clearly specifies the electronic products covered by the exemption, including mobile phones, laptops, tablets, personal computers, servers, hearables, wearables, as well as related parts and accessories.
The longer tax horizon is intended to encourage companies to make capital-intensive investments in India’s electronics manufacturing ecosystem.
15-Year Tax Exemption For Electronics Warehouses
The Bill also introduces a 15-year tax exemption for foreign companies that store electronic components in customs-bonded warehouses before supplying them to Indian manufacturers of specified electronic products.
The measure is designed to strengthen the supply chain around electronics manufacturing and provide greater certainty to overseas companies considering long-term operations in India.
Global Investment Funds Get Greater Tax Certainty
The amendments also seek to make India more attractive to global investment funds and fund managers.
Existing rules placed several conditions on overseas investment funds managed from India, including requirements related to the number of investors, fund size, investment concentration and individual investor participation.
The Bill rationalises these conditions while retaining safeguards against misuse and round-tripping. The government expects the changes to encourage global fund managers to shift more operations to India, potentially creating high-value financial services and skilled employment.
Tax Exemption For Certain FPI Income
Another important provision provides tax exemptions to eligible Foreign Portfolio Investors (FPIs) and the Bank for International Settlements (BIS) on interest income and capital gains earned from Indian government securities.
The exemptions remain subject to prescribed reporting requirements.
Overall, the Bill seeks to combine tax incentives with regulatory simplification to attract long-term capital, accelerate manufacturing, generate employment and strengthen India’s role in global supply chains.
Summary
The Taxation and Other Laws (Amendment) Bill, 2026, aims to attract FDI, strengthen manufacturing and improve ease of doing business in India. It extends electronics manufacturing tax incentives until March 31, 2041, introduces a 15-year tax exemption for certain bonded warehouses, rationalises rules for global investment funds and provides tax exemptions to eligible FPIs and BIS on specified income from Indian government securities.
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