Tag: electronics manufacturing

  • India Passes 2026 Tax Amendment Bill: Incentives for Foreign Investors, Electronics, and Data Centers

    India Passes 2026 Tax Amendment Bill: Incentives for Foreign Investors, Electronics, and Data Centers

    The Lok Sabha has passed the Taxation and Other Laws (Amendment) Bill, 2026, introducing a series of changes designed to attract foreign investment, strengthen India’s electronics manufacturing ecosystem, and create a more flexible framework for digital payments.

    The Bill amends provisions in the Income-tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007. It also replaces the Income-tax (Amendment) Ordinance, 2026. While much of the attention has focused on the possibility of future charges on UPI transactions, the legislation also includes tax incentives for foreign investors, data centres, electronics manufacturing, and the diamond industry.

    FDI, Electronics and Data Centres Get Tax Boost

    One of the Bill’s key features is the extension of tax incentives for foreign companies involved in electronics manufacturing. Eligible overseas firms supplying components through bonded warehouses to Indian manufacturers will continue to receive tax benefits until March 31, 2041. The legislation also eases tax rules for foreign-owned data centres by removing certain notification requirements and expanding eligibility to leased facilities, a move expected to encourage investment in India’s fast-growing digital infrastructure sector.

    Additionally, foreign institutional investors (FIIs) and the Bank for International Settlements (BIS) will receive tax relief on interest income and capital gains from investments in government securities, a measure aimed at attracting more global capital.

    UPI Provision Creates Flexibility, Not Immediate Charges

    The new provision in the Payment and Settlement Systems Act has attracted considerable attention since it gives the central government the discretion to determine which digital modes of payment will not incur any charges. However, the Bill does not immediately introduce any charges on UPI or reinstate the merchant discount rate (MDR). It provides the necessary provisions for the government to bring about such changes at a later point if needed, through a separate government notification.

    What It Means for Businesses and Investors

    The bill is expected to support various industries through reduced tax uncertainty and long-term policies. The manufacturing industry, cloud service providers, international investment firms, and companies working in special economic sectors can be provided with incentives for expanding their businesses in India. These changes might boost India’s status as an ideal place to manufacture goods, build digital infrastructure, and invest, creating jobs in the long run.

    Consumers will not directly experience any changes since no digital payments taxes have been announced. The bill provides the government with enough room for more flexible policies and the continued execution of its tax reforms and industry growth approach. Businesses and investors should watch for further amendments through regulations and notifications.

  • India Unveils Tax Reforms to Lure Offshore Fund Managers and Boost Foreign Investment

    India Unveils Tax Reforms to Lure Offshore Fund Managers and Boost Foreign Investment

    India has proposed significant tax reforms aimed at easing rules for offshore funds managed by Indian-based managers, as part of the Taxation and Other Laws Amendment Bill, 2026. The government says the changes seek to promote fund management activity and provide tax certainty, in a bid to attract foreign capital after recent overseas outflows and rupee pressure.

    The draft bill removes eight of the existing 13 safe harbour conditions, including minimum corpus tests, investor thresholds, ownership caps, and portfolio restrictions. Funds can now appoint India-based managers without triggering a taxable business connection solely through that arrangement. However, five safeguards remain: Indian residents cannot directly hold more than 5% of a fund’s corpus, the fund must remain non-resident, and it cannot control an Indian business.

    Girish Vanvari of Transaction Square noted that the proposal substantially reduces the risk of a taxable connection. Nehal Sampat, a PricewaterhouseCoopers partner, said the measure would help offshore funds hire onshore managers. EY India’s Tejas Desai added that the changes offer more flexibility for global structures. The reforms also support India’s broader push to bring more fund management activity onshore, aligning with Finance Minister Nirmala Sitharaman’s call for more foreign capital.

    In addition, the bill extends tax incentives for electronics contract manufacturing, granting a ten-year extension to the existing five-year exemption through 2040-41. Foreign companies supplying capital goods to Indian electronics manufacturers can use the exemption, and certain component sales through customs-bonded areas qualify. Specified foreign firms trading rough diamonds in notified special zones receive a 15-year tax holiday. Simpler rules for data centres allow eligible facilities to operate through ownership or leasing, reducing procedural steps.

    The bill also replaces a June ordinance for foreign portfolio investors in government securities, exempting qualifying interest income and capital gains from Indian tax. The government circulated the draft among lawmakers and may introduce it in Parliament this week; measures require parliamentary approval before taking effect.

  • India’s Proposed Tax Extension Through 2041 Could Boost Apple’s Manufacturing Expansion

    India’s Proposed Tax Extension Through 2041 Could Boost Apple’s Manufacturing Expansion

    India is considering a significant extension of tax exemptions for foreign electronics companies, a move that could substantially benefit Apple as it ramps up iPhone production in the country. The proposed amendment to tax laws would push the current incentives’ expiration date from 2031 to March 31, 2041, offering long-term fiscal certainty for global manufacturers.

    If approved by both houses of Parliament, the measure would extend tax breaks for foreign companies supplying machinery and components to contract manufacturers. This aligns with India’s broader strategy to solidify its position as a global electronics manufacturing hub, particularly under the ‘Make in India’ initiative.

    Apple Poised to Gain from Extended Tax Relief

    According to reports, Apple stands to benefit the most from this proposal. The tech giant had been seeking clarity on India’s tax regime concerning the supply of expensive equipment to its contractors, as ambiguity exposed it to higher tax risks. Under the proposed reforms, foreign firms supplying equipment used in manufacturing phones, tablets, laptops, wearables, and hearing aids would continue to enjoy tax exemptions until 2041.

    The draft also extends tax relief on income derived from storing and supplying electronic components through customs-bonded facilities, encouraging export-oriented manufacturing.

    India’s Electronics Manufacturing Strategy

    This tax extension is part of the government’s efforts to attract global manufacturers and reduce dependence on China. Apple’s manufacturing footprint in India has grown rapidly, with Counterpoint Research projecting that India will produce 26% of the world’s iPhones in 2026, up from just 6% four years ago. Industry experts believe the extended incentives could prompt more multinational electronics companies to invest in local production facilities and strengthen supplier networks.

    “The proposed tax changes will enable foreign companies to store and transfer critical equipment and components in India for their contract manufacturers, helping mitigate supply chain disruptions arising from trade uncertainties while providing greater tax certainty,” said Riaz Thingna, a partner at Grant Thornton Bharat.

    Wider Business Reforms in the Pipeline

    Beyond electronics, the proposed bills aim to improve India’s overall investment climate. For instance, foreign companies using data centers in India to serve global clients would no longer be required to own those facilities, but could lease them instead. Additionally, the bills recommend a 15-year tax exemption for foreign diamond miners and dealers operating through designated trading zones. Analysts say these measures are designed to enhance ease of doing business and provide long-term policy certainty for international investors.

    All these changes are subject to parliamentary approval and would take effect only after the bills are passed.

  • India’s Semiconductor Chip Supply Chain: Key Sources and Domestic Ambitions

    India’s Semiconductor Chip Supply Chain: Key Sources and Domestic Ambitions

    India relies heavily on imported semiconductor chips to power its booming electronics, automotive, and telecommunications sectors. Understanding the primary sources of these critical components reveals the global dependencies and strategic initiatives shaping the nation’s tech landscape.

    Taiwan: The Dominant Supplier

    Taiwan stands as India’s largest semiconductor supplier, led by industry giants like TSMC. These manufacturers produce advanced chips for smartphones, computers, automotive systems, and industrial electronics, making Taiwan an indispensable partner in India’s technology ecosystem.

    China: Mature Components Despite Geopolitical Tensions

    China supplies a wide range of mature semiconductor components used across consumer electronics, appliances, telecommunications equipment, and industrial manufacturing. Despite geopolitical challenges, China remains a key source for India’s semiconductor needs.

    South Korea: Memory and Storage Leadership

    South Korean companies Samsung and SK Hynix export memory chips, storage components, and semiconductor technologies that support India’s electronics manufacturing and smartphone production industries.

    United States: Advanced Processors and AI Semiconductors

    American companies design advanced processors, networking chips, and AI semiconductors widely integrated into India’s technology, cloud computing, and enterprise hardware markets.

    Japan: Specialty Materials and Equipment

    Japan provides specialty semiconductor materials, sensors, manufacturing equipment, and electronic components essential for India’s growing electronics and automotive industries across multiple sectors.

    Singapore: Regional Trading and Distribution Hub

    Singapore functions as a regional semiconductor trading and distribution hub, exporting integrated circuits and electronic components from multiple global manufacturers efficiently to India.

    Malaysia: Assembly, Testing, and Packaging

    Malaysia is a major assembly, testing, and packaging center, exporting semiconductor products and electronic components to India’s consumer electronics and automotive manufacturing sectors consistently.

    Vietnam: Emerging Electronics Manufacturing Hub

    Vietnam is an emerging electronics manufacturing hub supplying semiconductor-based components used in smartphones, computers, networking equipment, and other consumer electronic devices worldwide today.

    India’s Domestic Chip Mission

    Government initiatives encourage semiconductor fabrication, packaging, and design through incentives, aiming to reduce import dependence and strengthen domestic manufacturing. This strategic push seeks to build a self-reliant semiconductor ecosystem within India.

  • FUJIFILM India Partners with Gujarat Government to Advance Semiconductor Materials Manufacturing

    FUJIFILM India Partners with Gujarat Government to Advance Semiconductor Materials Manufacturing

    FUJIFILM India has signed a Memorandum of Understanding (MoU) with the Gujarat State Electronics Mission (GSEM) under the Department of Science and Technology, Government of Gujarat, to explore opportunities for manufacturing advanced semiconductor materials in the country and strengthen the domestic supply chain. The agreement was formalized during the Vibrant Gujarat Regional Conference in Vadodara.

    The collaboration aligns with India’s goal of becoming a global semiconductor hub. Through the MoU, FUJIFILM India will assess the feasibility of establishing a semiconductor materials production base in Dholera. The initiative aims to work closely with government bodies, industry associations, and private enterprises to build a resilient semiconductor supply chain.

    As demand for semiconductors surges across electronics, automotive, telecommunications, and artificial intelligence sectors, this partnership is expected to boost India’s self-reliance in critical semiconductor materials and enhance its position in the global value chain.

    Koji Wada, Managing Director of FUJIFILM India, stated: “At FUJIFILM India, we have been closely assessing opportunities across the Indian market and evaluating how our diverse businesses can contribute to the country’s long-term growth and innovation ambitions. This MoU marks an important milestone and brings us a step closer to realizing our plans for investment in Dholera. Guided by our Group Purpose of ‘Giving our world more smiles,’ we believe innovation should create meaningful value for society.”

    Abhi Shekhar Singh, National Head – Strategy & Business Development, Electronic Materials Division, FUJIFILM India, added: “FUJIFILM Electronic Materials develops and manages chemical formulations that power the most critical semiconductor processes. We are a diverse global supplier delivering tailored support where our customers need us most. We are now gearing up to introduce our technology to India’s semiconductor ecosystem, supporting today’s aspirational India and guaranteeing tomorrow’s Viksit Bharat.”

    With more than 20 production bases worldwide and deep expertise in advanced materials, Fujifilm Electronic Materials views India as a strategic market. The MoU reflects the company’s support for the Government of India’s “Make in India” initiative through localized manufacturing, technology collaboration, and supply chain development. By strengthening its engagement with India’s semiconductor ecosystem, Fujifilm aims to contribute to a sustainable, future-ready manufacturing infrastructure that supports the nation’s long-term ambitions.