India's government plans to present a set of tax bills to parliament aimed at luring foreign capital and supporting local manufacturing, according to people familiar with the proposals.
The measures under consideration include legislation to codify tax exemptions for overseas investors that buy Indian government bonds. Separate provisions would protect offshore funds from tax liabilities when those funds' investments are managed by fund managers based in India.
In addition, lawmakers will consider extending existing tax holidays for overseas suppliers of equipment to domestic electronics manufacturers. The current expiry date for those holidays is 2031; the proposals would push that deadline out to 2041. The expanded supplier incentives are intended to cover items such as mobile phones, laptops, tablets and servers, according to the people briefed on the plans.
Parliament is also expected to vote on tax benefits targeted at two other areas: data centres and diamond mining. The package of measures is presented as part of broader efforts by Prime Minister Narendra Modi to attract global manufacturers, provide support to the rupee and increase the economy's resilience following the U.S.-Iran conflict.
Finance Minister Nirmala Sitharaman is expected to introduce the bills during the current parliamentary session. The session, however, has seen interruptions caused by opposition protests, a development that has disrupted proceedings.
The proposals span multiple parts of the economy, including capital markets through bond-investor exemptions, the asset-management sector via protections for offshore funds under India-based management, and the electronics supply chain through extended supplier holidays. The inclusion of data centres and diamond mining in the measures broadens the intended reach of the package beyond traditional manufacturing incentives.
Timing and parliamentary dynamics will determine whether the measures are enacted during the session in which they are introduced. The reported plan reflects the government's stated priorities of drawing foreign investment, strengthening manufacturing capacity and addressing currency and resilience concerns in the wake of geopolitical tensions.