Sitharaman tables Tax Amendment Bill to boost foreign investment, Make in India

Union Finance Minister Nirmala Sitharaman on Tuesday introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha, proposing a series of tax reforms aimed at attracting global capital, strengthening domestic manufacturing, and simplifying compliance amid global economic uncertainty.

The Bill seeks to amend the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025, and the Finance Act, 2026, while replacing the Income-tax (Amendment) Ordinance, 2026, which was promulgated on June 5.

According to the government, the proposed changes are intended to shield the domestic economy from geopolitical disruptions, strengthen key sectors and provide greater policy certainty for investors.

A key provision of the Bill formalises tax exemptions for eligible foreign investors in government securities, a measure introduced through the June ordinance to attract foreign institutional investors (FIIs), foreign portfolio investors (FPIs) and the Bank for International Settlements (BIS), while deepening India’s sovereign debt market.

The legislation also seeks to make India a more attractive base for global investment funds and cloud service providers by clarifying tax rules to reduce uncertainty over tax liabilities.

Among the major proposals is a reform allowing Indian data centres to operate on leased infrastructure rather than requiring direct ownership, a move expected to support the growth of large AI-focused data centres and attract fresh investment.

To promote the Make in India initiative, especially in electronics manufacturing, the Bill proposes extending tax benefits for foreign companies supplying machinery and tooling to Indian contract manufacturers from five years to 15 years, up to the financial year 2040-41. The measure is expected to benefit global electronics companies, including Apple.

The Bill also aims to position India as a global hub for the rough diamond trade by granting a 15-year tax exemption to eligible foreign diamond miners, traders, brokers and auction houses operating in notified special zones in Mumbai and Surat.

In another relief measure, the proposed law removes the existing 2% presumptive tax on foreign companies storing electronic components in Indian bonded warehouses for use by domestic contract manufacturers.

Separately, the Lok Sabha passed the Appropriation Bill, 2026 by voice vote amid opposition protests over unrelated issues.