Centre Gives Green Signal to Foreign Investments

The Central Government has introduced the Taxes and Other Laws (Amendment) Bill, 2026 in the Lok Sabha to attract greater foreign investment into India. Finance Minister Nirmala Sitharaman presented the Bill, which aims to simplify tax regulations, provide policy certainty, and offer tax incentives to foreign investors and global companies willing to invest in the country. The government believes the reforms will strengthen domestic manufacturing and improve India's investment climate.

The Bill proposes several measures to encourage investment. Global investment fund managers operating from India will be eligible for tax benefits similar to those available in Gujarat's GIFT City. Tax exemptions are also proposed for foreign cloud service providers using leased data centres in India, a move expected to boost AI and digital infrastructure investments. Additionally, tax relief for investors in REITs and InvITs will continue even if the managing companies adopt the new income tax regime.

The government has also proposed income tax exemptions until 2040-41 for foreign companies manufacturing key electronic products such as smartphones, laptops, tablets, servers, and their components through Indian contract manufacturers. Another significant proposal allows banks and payment service providers to collect Merchant Discount Rate (MDR) charges from businesses with an annual turnover exceeding ₹50 crore for digital payments. Industry experts believe this could increase costs for merchants and potentially impact UPI transactions if the charges are passed on to consumers.