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Indian commerce body seeks tax clarity on diaspora investment
The appeal comes ahead of the Union Budget 2026–27 and highlights a critical gap in India’s new Income Tax Act, 2025.
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R Suryamurthy - Tue, 28, Oct 2025
- 09:04 EDT
- 21
Logo of the Federation of Indian Chambers of Commerce and Industry (FICCI) / Courtesy: Wikipedia
In a move that could significantly impact global Indian investors and overseas partners of Indian manufacturers, the Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to clarify tax rules that currently discourage foreign companies—including those run by the Indian diaspora—from storing components or deploying machinery in India for manufacturing.
The appeal comes ahead of the Union Budget 2026–27 and highlights a critical gap in India’s new Income Tax Act, 2025. Under existing provisions, foreign original equipment manufacturers (OEMs) risk being deemed to have a “business connection” in India—and therefore subject to Indian taxation—merely because they store inputs or provide free-of-cost equipment to Indian contract manufacturers.
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