Govt mulls tax changes to attract foreign investments, cuts for overseas investors: Report
The proposals are part of the government's efforts to curb capital outflows, support the rupee, and strengthen the economy against external shocks after the US-Iran conflict.
- Aug 4, 2026,
- Updated Aug 4, 2026 12:00 PM IST
India is reportedly preparing to seek parliamentary approval for a set of tax changes aimed at attracting foreign investment and boosting local manufacturing. This move comes as Prime Minister Narendra Modi refocuses the government's agenda on economic growth following recent student protests.
According to a report in Bloomberg, the proposed measures include formalising tax cuts for overseas investors buying Indian sovereign debt and protecting offshore funds from tax liability when their investments are managed by India-based fund managers. Parliament is also expected to vote on extending tax holidays for overseas suppliers of equipment to domestic electronics manufacturers, along with providing tax benefits to data centres and the diamond mining sector.
Among the proposed changes, amendments to the Income Tax Act would extend tax exemptions for contract manufacturers until 2041, up from the current expiry in 2031. This extension covers electronics products such as mobile phones, laptops, tablets, and servers.
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The government also plans to convert into law an existing ordinance that exempts foreign institutional investors from tax on interest earned from government securities, as well as capital gains from the sale, exchange, or transfer of those securities.
The proposals are part of the government's efforts to curb capital outflows, support the rupee, and strengthen the economy against external shocks after the US-Iran conflict.
Finance Minister Nirmala Sitharaman is likely to introduce the bills during the current parliamentary session, which runs until August 13. However, the session has faced disruptions due to opposition demands for debates on exam paper leaks and student protests. With less than ten days remaining, the government is under pressure to pass the tax measures despite the legislative challenges.
India is reportedly preparing to seek parliamentary approval for a set of tax changes aimed at attracting foreign investment and boosting local manufacturing. This move comes as Prime Minister Narendra Modi refocuses the government's agenda on economic growth following recent student protests.
According to a report in Bloomberg, the proposed measures include formalising tax cuts for overseas investors buying Indian sovereign debt and protecting offshore funds from tax liability when their investments are managed by India-based fund managers. Parliament is also expected to vote on extending tax holidays for overseas suppliers of equipment to domestic electronics manufacturers, along with providing tax benefits to data centres and the diamond mining sector.
Among the proposed changes, amendments to the Income Tax Act would extend tax exemptions for contract manufacturers until 2041, up from the current expiry in 2031. This extension covers electronics products such as mobile phones, laptops, tablets, and servers.
MUST READ | Tax revamp likely for Foreign Eligible Investment Funds
The government also plans to convert into law an existing ordinance that exempts foreign institutional investors from tax on interest earned from government securities, as well as capital gains from the sale, exchange, or transfer of those securities.
The proposals are part of the government's efforts to curb capital outflows, support the rupee, and strengthen the economy against external shocks after the US-Iran conflict.
Finance Minister Nirmala Sitharaman is likely to introduce the bills during the current parliamentary session, which runs until August 13. However, the session has faced disruptions due to opposition demands for debates on exam paper leaks and student protests. With less than ten days remaining, the government is under pressure to pass the tax measures despite the legislative challenges.