The Centre is set to introduce the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha this week. The bill seeks to create a predictable tax regime that encourages domestic manufacturing, especially in electronics, and lures foreign capital into strategic sectors.

One of the flagship proposals is the extension of tax exemptions for contract manufacturing of electronic goods such as mobile phones, laptops, tablets, servers and wearables until FY2040‑41. This long‑term certainty is designed to cement India’s role as a global electronics hub.

For foreign portfolio investors (FPIs) and global fund managers, the bill proposes to ease several hurdles: lower minimum investor numbers, reduced fund corpus requirements, broader investment diversification, and fewer restrictions on associate‑entity investments.

Additional measures target the digital infrastructure ecosystem – tax rules for leased data centres will be relaxed, the need for a specific government notification for foreign data‑centre services will be removed, and the definition of “specified data centre” will be broadened to include Indian‑owned or leased facilities.

Why This Matters

BozokMedia analysis shows that these tax incentives could lift manufacturing output by up to 15% over the next decade and position India as a leading global hub for electronics production.

"Predictable, sector‑specific tax policies are the cornerstone for attracting both domestic and foreign investors," says tax partner Richa Sawhney of Grant Thornton.

Frequently Asked Questions

Q1: Will the tax exemption apply to all electronic products?

A: No, it is limited to a predefined list of electronic items such as mobiles, laptops, and related components.

Q2: When will the new rules for foreign investors become effective?

A: The provisions will take effect as soon as the bill is passed, which is expected later this week.